Consider a project with free cash flows in one year of $136,659 in a weak market or $162,877 in a strong​ market, with e

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Consider a project with free cash flows in one year of $136,659
in a weak market or $162,877 in a strong​ market, with each
outcome being equally likely. The initial investment required for
the project is $110,000​, and the​ project's unlevered cost of
capital is 16%. The​ risk-free interest rate is 11%. ​(Assume
no taxes or distress​ costs.)
a. What is the NPV of this​ project?
b. 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?  
c. 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 in a weak market and a strong market at the end
of year​ 1, and what is its initial market value of the
levered equity according to​ MM?Assume that
the​ risk-free rate remains at its current level and ignore
any arbitrage opportunity.