Question 2.(10 points). Consider Poisson Ltd., which is facing financial distress. Poisson Ltd. has a loan of $1 million due at the end of the year. Without a change in its strategy, the markert value of its assets will be only $900,000 at that time, and Poisson Ltd. will default on its debt. The current risk-free rate is 5% a) Poisson Ltd. is considering a new strategy that requires no upfront investment, but it has only a 50% chance of success. If the new strategy succeeds, it will increase the value of the firm's assets to $1.3 million. If the new strategy fails, the value of the firm's assets will fall to $300,000. What is the expected value of the firm's assets under the new strategy? Can shareholders benefit from this decision? b)Now assume Poisson Ltd. does not pursue the risky strategy but instead the firm is considering an investment opportunity that requires an initial investment of $100,000 and will generate a risk-free return of 50%, if Poisson Ltd. does not have the cash on hand to make the investment, could Poisson Ltd. raise $100,000 in new equity to make the investment? Question 2.(10 points). Consider Poisson Ltd., which is facing financial distress. Poisson Ltd. has a loan of $1 million due at the end of the year. Without a change in its strategy, the markert value of its assets will be only $900,000 at that time, and Poisson Ltd. will default on its debt. The current risk-free rate is 5% a) Poisson Ltd. is considering a new strategy that requires no upfront investment, but it has only a 50% chance of success. If the new strategy succeeds, it will increase the value of the firm's assets to $1.3 million. If the new strategy fails, the value of the firm's assets will fall to $300,000. What is the expected value of the firm's assets under the new strategy? Can shareholders benefit from this decision? b)Now assume Poisson Ltd. does not pursue the risky strategy but instead the firm is considering an investment opportunity that requires an initial investment of $100,000 and will generate a risk-free return of 50%, if Poisson Ltd. does not have the cash on hand to make the investment, could Poisson Ltd. raise $100,000 in new equity to make the investment