Problem:
The true values of assets in place of firms G and B are $200,000 and 150,000, respectively. The uninformed market cannot distinguish between the two and prices them at the average of $175,000. Both firms have 10,000 shares outstanding. Both firms find out that they have access to a project that costs $50,000 and has an NPV of $3000. The market knows the correct cost and NPV of the project for both firms. Assume that the firms must finance the project by issuing new equity.
Required:
Question: Determine whether G and/or B will accept the project under these circumstances.
Note: Explain all steps comprehensively.