16)The all-equity firm, Unlevered Corporation wants to diversify its business.

The updated financial information for the company is shown here:

Stock price $ 68 Number of shares 30,000 Total assets $ 8,000,000 Total liabilities $ 3,500,000 Net income $ 360,000

The firm is considering an investment that has the same PE ratio as the firm. The cost of the investment is $750,000, and it will be financed with a new equity issue. The return on the investment will equal the firm's current ROE.

What will happen to the EPS and Market-to-book ratio of the firm if the investment is undertaken.

Group of answer choices

EPS will increase; Book-to-market ratio will increase

EPS will increase; Book-to-market ratio is unchanged

EPS will increase; Book-to-market ratio will decrease

EPS will decrease; Book-to-market ratio will increase

EPS will decrease; Book-to-market ratio is unchanged

EPS will decrease; Book-to-market ratio will decrease

None of the above