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A firm has cash flow from operations of $100 million and needs $120 million for investment purposes. Assume that the firm has 10 million shares

A firm has cash flow from operations of $100 million and needs $120 million for investment purposes. Assume that the firm has 10 million shares outstanding and wants to maintain a dividend of $2 a share. If the firm wishes to raise capital with a new share issue what is the new issue worth?

1. $120 million

2.$100 million

3.$22 million.

4.$40 million

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