Question
SST has 250,000 shares of stock outstanding, $400,000 in perpetual after-tax EBIT, and a discount rate of 15 percent. The firm is considering a new
SST has 250,000 shares of stock outstanding, $400,000 in perpetual after-tax EBIT, and a discount rate of 15 percent. The firm is considering a new project that has initial costs of $380,000 and annual perpetual after-tax EBIT of $60,000. What will be the change in the firms stock price per share if this project is accepted?
A $0.08
B $0.20
C $0.16
D $0.12
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Finance Applications and Theory
Authors: Marcia Cornett, Troy Adair
3rd edition
1259252221, 007786168X, 9781259252228, 978-0077861681
