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Please help me answer the following question parts a to c with clear answers. Thank you Homework: Lab #5 Question 12, Problem 17-16 Part 1
Please help me answer the following question parts a to c with clear answers. Thank you
Homework: Lab #5 Question 12, Problem 17-16 Part 1 of 3 HW Score: 71.43%, 20 of 28 points O Points: 0 of 3 Save AMS Company has unexpectedly generated a one-time extra $6 million in cash flow this year. After announcing the extra cash flow, AMS stock price was $60 per share (it has 1 million shares outstanding). The managers are considering spending the $6 million on a project that would generate a single cash flow of $6.5 million in one year, which they would then use to repurchase shares. Assume the cost of capital for the project is 14%. a. If they decide on the investment, what will happen to the price per share? b. If they instead use the $6 million to repurchase stock immediately, what will be the price per share? c. Which decision is better and why? ... a. If they decide on the investment, the price per share will be $ (Round to the nearest cent.)Step by Step Solution
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