Problem 15-11 Dilution [LO3]

3.The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:

Stock price $ 56 Number of shares 20,000 Total assets $6,200,000 Total liabilities $3,000,000 Net income $ 410,000 MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $700,000, and it will be financed with a new equity issue. The ROE on the investment would have to be percent (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) if we wanted the price after the offering to be $56 per share (assume the PE ratio remains constant), and the NPV of the investment would be (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.) Accounting dilution occur in this case. Market value dilution occur in this case. does not does