1. Dimkoff Tennisworld, Inc. has 4 million shares of common stock outstanding, currently selling for $15 per share. The company is considering undertaking some new investments that are listed below with their initial investment costs and estimated profitability indices.

Investment Prospect Initial Investment PI

A. Expand clothing line $2,000,000 1.5

B. Open European stores 3,000,000 1.6

C. Produce aluminum rackets 800,000 2.0

D. Produce more tennis balls 1,500,000 1.4

E. Increase advertising 500,000 2.8

a. Which investment will add the most value to stockholders wealth? Justify your answer.

b. What would Dimkoffs theoretical stock price be if the company undertook all five investments?