Suppose an entrepreneur is creating a new firm and has a single project requiring an initial investment of $100 today. I

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Suppose an entrepreneur is creating a new firm and has a single
project requiring an initial investment of $100 today.
In one year, if the demand for the firm’s product is
strong, the project will generate a cash flow of $990. If demand
for the firm’s product is weak, the project will generate a cash
flow of $110. The probability of the good state is 25% and the
probability of the bad state is 75%.
The risk-free rate is 5% APR with annual compounding and
investors require a risk premium of 5% APR with annual compounding
in order to invest in this new firm. Thus, the cost of capital for
this firm is 10% APR with annual compounding. This company
plans to finance itself by issuing $100 of debt maturing in one
year with 5% interest rate and finance the remainder with equity.
The firm plans to have 25 shares outstanding.
Based on this information, the expected share price is closest
to which of the following amounts?
$4
$8
$40
$80
$100