HAL Corporation is introducing a new artificial intelligence product There are three possible outcomes If the product is highly successful, the company will be worth $150 billion, if moderately successful $25 billion, if a complete failure $5 billion Each outcome is equally likely The results will be known two years from today There are no taxes on income or capital gains Show your calculations (10 pts) If the risk free rate of return is 4 annually, what is the maximum amount of risk free debt HAL can issue If HAL's unlevered equity premium is 16 , what is the unlevered value of HAL today What is HAL's unlevered cost of capital HAL's raises $4 622 billion by issuing debt What is the cost of equity and debt, respectively What is HAL's WACC Do the answers to 1 through 4 support MM I and II Why or why not

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Question: HAL Corporation is introducing a new artificial intelligence product. There are three possible outcomes: If the product is highly successful, the company will be worth

HAL Corporation is introducing a new artificial intelligence product. There are three possible outcomes: If the product is highly successful, the company will be worth $150 billion, if moderately successful $25 billion, if a complete failure $5 billion. Each outcome is equally likely. The results will be known two years from today. There are no taxes on income or capital gains. Show your calculations. (10 pts)

If the risk-free rate of return is 4% annually, what is the maximum amount of risk-free debt HAL can issue?
If HAL's unlevered equity premium is 16%, what is the unlevered value of HAL today?
What is HAL's unlevered cost of capital?
HAL's raises $4.622 billion by issuing debt. What is the cost of equity and debt, respectively? What is HAL's WACC?
Do the answers to 1. through 4. support MM I and II? Why or why not?

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