U.6 01 Save each strategy are shown below. The risk of each project is diversifiable Strategy Probability (%) Payoff (5 million) A 100 70 B 50 130 50 0 10 290 90 40 a. Which project has the highest expected payoff? b. Suppose Zymase has debt of $40 million due at the time of the project's payoff Which strategy has the highest expected payoff for equity holders? c. Suppose Zymase has debt of $120 million due at the time of the project's payoff Which strategy has the highest expected payoff for equity holders? d. If management chooses the strategy that maximizes the payoff to equity holders, what is the expected agency cost to the firm from having $40 million in debt duo? What is the expected agency cost to the firm from having $120 million in debt duo? a. Which project has the highest expected payoff? (Select the best choice below.) Project A B. Project B C Project b. Suppose Zymase has debt of $40 million due at the time of the project's payoff. Which project has the highest expected payoff for equity holders? (Select the best choice below.) O A Project A Project B 00 Project C c. Suppose Zymase has debt of $120 million due at the time of the project's payo. Which project has the highest expected payoff for equity holders? (Select the best choice below) DA Project A Project B c. Project C d. If management chooses the strategy that maximizes the payoff to equity holders, what is the expected agency cost to the firm from having $40 million in debt due? What is the expected agency cost to the firm from having $120 million in debt due? The expected agency cost to the firm from having $40 million in debt due is $milion (Round to one decimal place.) Consider a firm whose only asset is a plot of vacant land, and whose only liability is debt of $15.1 million due in one year. If left vacant, the land will be worth $99 million in one year. Alternatively, the firm can develop the land at an up-front cost of $20.3 milion. The developed the land will be worth $34.5 milion in one year Suppose the risk-free interest rate is 10.2%, assume all cash flows are risk-free, and there are no taxes a. If the firm chooses not to develop the land, what is the value of the firm's equity today? What is the value of the debt today? b. What is the NPV of developing the land? c. Suppose the firm raises $20 3 million from the equity holders to develop the land, If the firm develops the land, what is the value of the firm's equity today? What's the value of the firm's debt today? d. Given your answer to part (e), would equity holders be willing to provide the $20.3 million needed to develop the land? a. If the firm chooses not to develop the land, what is the value of the firm's equity today? What is the value of the debt today? 1f the firm chooses not to develop the land, the value of the equity is smilion (Round to two decimal places.)