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A firm has debt maturing two years from now with face value $200 million. The firm can choose one of two strategies, the first offering a 40% chance of total payoff $230 million and a 60% chance of $209 million, either to come in two years. The second strategy offers a payoff in two years that is $260 million with 80% probability and $30 million with 20% probability. Neither of these strategies involves market risk, and the firm will have no going-concern value beyond year 2. Equity holders would choose Strategy __________, while if managers acted in the interest of the firm as a whole, they would select __________.

Mizer Corp. currently has 50 million shares worth $50 each and no debt. Mizer is considering issuing some debt and using the proceeds to pay a dividend, such that the scale of firm operations would not change. Debt would be sold at a fair price. Following are the possible debt amounts with corresponding effects on the firm:

Value of Debt	Present Value of Tax Shields	Present Value of Bankruptcy Costs
$200 million	$80 million	$15 million
$500 million	$140 million	$75 million
$1.2 billion	$170 million	$150 million
$1.8	$185 million	$250 million

No change is also a possibility. There are no other avenues through which capital structure impacts firm value. What should be the stock price per share after the dividend (there are no personal taxes)?

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