The market demand function for the discrete GPU is given by

Q = 10 - 0.2P

Nvidia is the leader of the market and its marginal cost of production is 5. Shareholders of AMD are debating whether to enter the GPU market as well. If AMD enters, it will engage in a sequential Cournot competition game with Nvidia: Nvidia decides its quantity of production first. AMD observes Nvidia's outputqNbefore setting its own productionqA.

(a) (5 points) Suppose AMD's current marginal cost of GPU production is 10. If AMD enters the GPU market, what is AMD's maximalprofitin the sequential-game equilibrium?

(b) (10 points) Suppose AMD's research department has just developed a new production technology that can lower AMD's marginal cost of production to 6. However, the technology requires Y amount of upfront investment. AMD currently has 20 worth of assets and 30 debt outstanding due. AMD cannot borrow any new debt and must finance the new technology with equity. If AMD enters the GPU market with the new technology, its total asset value will increase by the exact same amount of the maximal profit generated from the sequential-game equilibrium under the new technology, but the debtholders must be repaid in full first. What is themaximalupfront cost Y that would allow AMD to finance the new technology by issuing new equity?