Part C.

Click Submit to complete this assessment estion 4 25 points As a financial analyst at BAC financials, you want to determine how an announcement from Large Diesel Company will impact its stock price. Large Diesel Company has Income of $6 million and has 1 milion shares of stock outstanding. The company has no expansion opportunities, and depreciation equals the replacement cost necessary maintain the current level of output, so income is available to distribute as dividends and is expected to continue indefinitely. Dividends are paid annually and the last divide was just paid. Similar investments pay a rate of return of 15 percent a)What is the value of the company S40000000 (sample answer: $2345678.53 or $2.345678 million) and the share price of the company S40 (sample answer:$200.53)? (sample answer $200.53) b) A new investment opportunity arises for Large Diesel Company. The investment will require $2 milion of equity a year from now, and will eam income (avaluable for dividend of $600,000 a year indefinitely. What is the value today of that future investment opportunity 173013044 2 (sample answer 52345675) c) Suppose investors are fully informed that the new investment opportunity will be funded with the sale of new shares. What is the price of new share to be issued to raise $2 million? (sample answer $25,35) and how many new shares will be issued to raise $2 million 7/sample answer 60000 shares) Click Submit to complete this assessment e