Question
Firm A is financing their new project with a new equity issue. The firm has $20,000,000 in Total Assets and $7,500,000 in Total Liabilities.
Firm A is financing their new project with a new equity issue. The firm has $20,000,000 in Total Assets and $7,500,000 in Total Liabilities. There is 3,000,000 shares outstanding at $15 per share, and Firm A current Net Income is $2,500,000. The project costs $900,000 and has the same PE ratio as the firm and returns are expected to equal the current ROA (Return on Assets). What is the current Market to Book ratio?
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