Document1 - Word Stanley Siu File Home Insert Draw Design Layout References Mailings Review View Help Tell me what you want to do Share Cut Calibri (Body) 11 Find Aav A A : AALI Le Copy AaBbCcDc AaBbCcDc AaBbc Aabbccc AaB 1 Normal 11 No Spac... Heading 1 Heading 2 Title aac Replace Paste B I U abc X, x? Aaly AA DE Format Painter Select Clipboard Font Paragraph Styles N Editing Acort Industries owns assets that will have a(n) 65% probability of having a market value of $46 million in one year. There is a 35% chance that the assets will be worth only $16 million. The current risk-free rate is 8%, and Acort's assets have a cost of capital of 16%. a. If Acort is unlevered, what is the current market value of its equity? b. Suppose instead that Acort has debt with a face value of $16 million due in one year. According to M&M, what is the value of Acort's equity in this case? c. What is the expected return of Acort's equity without leverage? What is the expected return of Acort's equity with leverage? d. What is the lowest possible realized return of Acort's equity with and without leverage? 2. a. If Acort is unlevered, what is the current market value of its equity? The current market value of the unlevered equity is $ 30.603 million. (Round to three decimal places.) b. Suppose instead that Acort has debt with a face value of $16 million due in one year. According to M&M, what is the value of Acort's equity in this case? According to M&M, the current market value of the levered equity is $ 15.788 million. (Round to three decimal places.) c. What is the expected return of Acort's equity without leverage? What is the expected return of Acort's equity with leverage? The expected return of Acort's equity for both cases is: Expected Return Without Leverage: % (Round to two decimal places.) With Leverage % (Round to two decimal places.) Help me solve this View an example Ask my instructor Clear all Check ans (Ctrl) Page 3 of 3 O words ng English (Canada) Accessibility: Investigate 210% 2