In: Finance
The Metallica Heavy Metal Mining (MHMM) Corporation wants to
diversify its operations. Some recent financial information for the
company is shown here:
Stock price | $ | 50 | |
Number of shares | 40,000 | ||
Total assets | $ | 6,000,000 | |
Total liabilities | $ | 2,000,000 | |
Net income | $ | 500,000 | |
The company is considering an investment that has the same PE ratio
as the firm. The cost of the investment is $800,000, and it will be
financed with a new equity issue. (Do not round
intermediate calculations.)
The ROE on the investment would have to be percent (Enter
your answer as a percent rounded to 2 decimal places, e.g.,
32.16.)
if we wanted the price after the offering to be $50 per share (assume the PE ratio remains constant), and the NPV of the investment would be $ (Leave no cells blank - be certain to enter "0" wherever required.).