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A company had a current share price of $49.75, and the firm had 800,000 shares of stock outstanding. The company is considering an investment project
A company had a current share price of $49.75, and the firm had 800,000 shares of stock outstanding. The company is considering an investment project that requires an immediate $5,900,000 investment but will produce a single cash flow of $10,600,000 after 4 years then close. If the company invests in the project, what would the new share price be? The company's cost of capital is 11.7%. (Hint: calculate the project NPV then consider how the project NPV affects the stock price)
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