The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for
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The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:
Stock price.......................................$71
Number of shares.....................43,000
Total assets.........................$6,300,000
Total liabilities....................$2,300,000
Net income............................$638,000
The company is considering an investment that has the same PE ratio as the firm. The cost of the investment is $950,000, and it will be financed with a new equity issue. The return on the investment will equal the company’s current ROE. What will happen to the book value per share, the market value per share, and the EPS? What is the NPV of this investment? Does dilution take place?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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The current ROE of the company is ROE 0 NI 0 TE 0 ROE 0 6380006300000 2300000 ROE 0 1595 or 1595 The ...View the full answer
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Related Book For 
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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