Question
Some recent financial information for the company is shown here: Stock price $ 75 Number of shares 40,000 Total assets $ 6,000,000 Total liabilities $
Some recent financial information for the company is shown here:
Stock price | $ | 75 | |
Number of shares | 40,000 | ||
Total assets | $ | 6,000,000 | |
Total liabilities | $ | 2,000,000 | |
Net income | $ | 500,000 | |
considering an investment that has the same P/E ratio as the firm. The cost of the investment is $800,000, and it will be financed with a new equity issue. The return on the investment will equal H2M2s current ROE.
What will happen to the book value per share? (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)
Current book value | $ per share |
New book value | $ per share |
What will happen to the market-to-book ratio? (Do not round intermediate calculations. Round the fianl answers to 3 decimal places.)
Current market-to-book | |
New market-to-book | |
What will happen to the EPS? (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)
Current earnings per share | $ |
New earnings per share | $ |
What is the NPV of this investment? (Negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to the nearest whole dollar. Omit $ sign in your response.)
NPV $
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