What is the initial market value of the unlevered? equity

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Consider a project with free cash flow in one year of $131,536 or $182,630?, with either outcome being equally likely. The initial investment required for the project is $110,000?, and the? project's cost of capital is 22%. The? risk-free interest rate is 10%. ?(Assume no taxes or distress? costs.)

Problem 1: What is the NPV of this? project?

Problem 2: Suppose that to raise the funds for the initial? investment, the project is sold to investors as an? all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this way-that ?is, what is the initial market value of the unlevered? equity?
  
Problem 3: Suppose the initial $110,000 is instead raised by borrowing at the? risk-free interest rate. What are the cash flows of the levered? equity, and what is its initial value according to? M&M

Reference no: EM132815276

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