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$ 72 Stock price Number of shares 25,000 $6,100,000 Total assets Total liabilities $3,500,000 $770,000 Net income MHMM is considering an investment that has the
$ 72 Stock price Number of shares 25,000 $6,100,000 Total assets Total liabilities $3,500,000 $770,000 Net income MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $700,000, and it will be financed with a new equity issue. The return on the investment will equal MHMM's current ROE. a. What is the new price per share if the investment is made? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will happen to the book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What will happen to the market-to-book ratio? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) d. What will happen to the EPS? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) e. What is the NPV of this investment? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) X Answer is not complete. a. New price $ 95.04 X b. Current book value $ New book value $ Current market-to- C. $ book New market-to-book $ d. Current EPS $ New EPS $ e. NPV 104.00 95.04 0.6923 0.7576 x 30.80 22.18 X
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