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5. (25 points) Contango Inc. expects to earn $25 million per year in a perpetuity if no other investments are made. Recently after receiving approval
5. (25 points) Contango Inc. expects to earn $25 million per year in a perpetuity if no other investments are made. Recently after receiving approval by the Board of Directors, it halted all dividend payments. At this point, it would be ideal for a firm to take on a fiscally healthy investment opportunity, to strengthen its earnings. The firm is considering investing $2 million next year in a project that will generate an additional $480,000 in every subsequent year. Contango Inc. has 11 million shares outstanding. The firm's cost of capital is 9%. What the per share stock value if it undertakes this project
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