Wolfrum Technology(WT) has no debt. Its assets will be worth $417 million one year from now if the economy isstrong, but only $290million in one year if the economy is weak. Both events are equally likely. The market value today of its assets is $27 million.

a. What is the expected return of WT stock withoutleverage?

The unlevered expected return of WT stock is .............%. (Round to two decimalplaces.)

b. Suppose therisk-free interest rate is 5%. If WT borrows $113 million today at this rate and uses the proceeds to pay an immediate cashdividend, what will be the market value of its equity just after the dividend ispaid, according toMM?

The market value ofWT's equity is $.............million. (Round to the nearestinteger.)

c. What is the expected return of WT stock after the dividend is paid in part (b)?

The expected return of WT stock is .............%. (Round to two decimalplaces.)