Gladstone Corporation is about to launch a new product. Depending on the success of the new? product, Gladstone may have one of four values next? year: $150 million, $135 million, $95 million, and $80 million. These outcomes are all equally? likely, and this risk is diversifiable. Gladstone will not make any payouts to investors during the year. Suppose the? risk-free interest rate is 5.0% and assume perfect capital markets.

a. What is the initial value of? Gladstone's equity without? leverage?

Now suppose Gladstone has? zero-coupon debt with a $100 million face value due next year.

b. What is the initial value of? Gladstone's debt?

c. What is the? yield-to-maturity of the? debt? What is its expected? return?

d. What is the initial value of? Gladstone's equity? What is? Gladstone's total value with? leverage?

a. What is the initial value of? Gladstone's equity without? leverage?

The initial value of? Gladstone's equity without leverage is $_____ million. ? (Round to two decimal? places.)

Now suppose Gladstone has? zero-coupon debt with a $100 million face value due next year.

b. What is the initial value of? Gladstone's debt?

The initial value of? Gladstone's debt is $______ million. ? (Round to two decimal? places.)

c. What is the? yield-to-maturity of the? debt? What is its expected? return?

The? yield-to-maturity is ______?%. (Round to the nearest? integer.)

The expected return is _____?%. (Round to one decimal? place.)

d. What is the initial value of? Gladstone's equity? What is? Gladstone's total value with? leverage?

The initial value of? Gladstone's levered equity is $_____ million. ?(Round to two decimal? places.)

?Gladstone's total value with leverage is $_____ million. ? (Round to two decimal? places.)