Question
(4 points) Firm CCC has no debt. Existing assets generate earnings, E=(EPS*Number of shares outstanding) of $8mil. per year forever. Discount rate=10%. Firm has n
(4 points) Firm CCC has no debt. Existing assets generate earnings, E=(EPS*Number of
shares outstanding) of $8mil. per year forever. Discount rate=10%. Firm has n shares (4 mil.) currently selling at P=$20 per share. Now firm plans to invest I=$20mil. in new project
Project will generate $3 mil. in new earnings per year forever Firm will issue N* new shares at price P* to finance project. Suppose now new shares can only be sold for $15, what is the gain by new shareholders?
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Entrepreneurial Finance And Accounting For High-Tech Companies
Authors: Frank J Fabozzi
1st Edition
0262336901, 9780262336901
