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A company had a current share price of $65.10, and the firm had 1,500,000 shares of stock outstanding. The company is considering an investment project
A company had a current share price of $65.10, and the firm had 1,500,000 shares of stock outstanding. The company is considering an investment project that requires an immediate $10,000,000 investment but will produce a single cash flow of $24,500,000 after 5 years then close. If the company invested in the project, what would the new stock price be? The company's cost of capital is 12.4%. (Hint: calculate the project NPV then consider how the project NPV affects the stock price)
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