Rambo Real Estate, Inc., expects to earn $110 million per year in perpetuity if it does not undertake any new project. The firm has an opportunity to make a real estate investment with the initial cost of $12 million today and another cost of $7 million in one year. The new investment will generate annual earnings of $10 million in perpetuity, beginning two years from today. The firm has 20 million share of common stock outstanding, and the required rate of return on the stock is 10 percent. Ignore taxes.

1. What is the per-share stock price if the firm does not undertake the

new investment?

2. What is the NPV of the real estate investment?
3. What is the per-share stock price if the firm undertakes the investment?