Question: A firm is worth $75 or $210 with equal probability and is financed with debt that has a face value of $80. It is considering

A firm is worth $75 or $210 with equal probability and

A firm is worth $75 or $210 with equal probability and is financed with debt that has a face value of $80. It is considering a new project that is equally likely to be worth - $50 or +$55. The cost of capital is 12% for all securities. Calculate the present values of the firm's debt and equity, assuming that the project is not undertaken. O Debt 69.2; Equity 58.04 Debt 80; Equity 47.23 Debt 80: Equity 62.5 O Debt 63.62; Equity 63.62

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