A firm has no debt. Existing assets generate earnings (E) of $35 million per year forever. Discount rate is 14%. Firm has 12.5 million shares (n). Now firm plans to invest I=$15 million in a new project. The new project will generate $14 million in new earnings forever per year.

Q5. If the firm issues the new shares at P* = 25 per share to finance the project, how many shares the firm needs to issue?

		6.8 mil. shares
		0.48 mil. shares
		0.6 mil. shares
		0.25 mil. shares
		0.68 mil. shares