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QUESTION 1 Suppose that your all-equity firm is currently valued at $50M, which is based on the present value of the firm's future cash flows.

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QUESTION 1 Suppose that your all-equity firm is currently valued at $50M, which is based on the present value of the firm's future cash flows. You want to raise $10M in equity from new shareholders to invest in a project that will increase the value of your firm by $25M. Please provide the solutions to the following questions (a,b,c,d) in the box below. a. What percentage of your firm would you have to sell to new shareholders in exchange for $10M? b. And how many shares would this represent, given that your firm previously had 700K shares outstanding? c. Determine price per share at which shares must be issued and sold to new shareholders. d. What would be the rate of return on investment for old and new shareholders after the company invests in the project and value of the company is adjusted to the new level? TTTT Paragraph : Arial 3 (12pt) T' T. fx Mashups - 1 HTML CSS Path: P Words:0

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