2. In the game between the manager and the stockholders of Ross (1977), the future value of the firm is random and uniformly distributed on the interval [0, t], where t is the upper bound of V1. The manager knows the value of t, but the stockholders do not, and this is the asymmetry of information. In observing the debt level F chosen by the manager, the stockholders think that the value of t is given by a[F]. In the lecture on the model of Ross, it was shown that a[F] has the following form:
a[F] =the square root of 4* γ1/ γ0* L F +c^2.
Compute the debt level F that maximizes the manager’s expected payoff
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