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Number of shares outstanding 100,000 Book value $400,000 Market value $800,000 Net income $80,000 Return on equity .20 Price-earnings ratio 10 Earnings per share $.80

Number of shares outstanding

100,000

Book value

$400,000

Market value

$800,000

Net income

$80,000

Return on equity

.20

Price-earnings ratio

10

Earnings per share

$.80

Net Present Value

$100,000

Equipment cost

$250,000

1) What will be the stock price of the company after the project is readily executed?

2) Evaluate the impact on the wealth of the shareholders after the project.

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