What is the value of? acort equity in this? case

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Question - Acort Industries owns assets that will have? a(n) 60% probability of having a market value of $58 million one year from now. There is a 40% chance that the assets will be worth only $28 million. The current? risk-free rate is 9%?, and? Acort's assets have a cost of capital of 18%.

a. If Acort is? unlevered, what is the current market value of its? equity?

b. Suppose instead that Acort has debt with a face value of $21 million due in one year. According to? MM, what is the value of? Acort's equity in this? case?

c. What is the expected return of? Acort's equity without? leverage? What is the expected return of? Acort's equity with? leverage?

d. What is the lowest possible realized return of? Acort's equity with and without? leverage?

Reference no: EM132964146

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