Question
The Company Metallica Heavy Metal Mining needs to diversify its operations. Some recent monetary information shown here: Stock price----------------------- $ 74 Number of shares---------------30,000 Total
The Company Metallica Heavy Metal Mining needs to diversify its operations. Some recent monetary information shown here:
Stock price----------------------- $ 74
Number of shares---------------30,000
Total assets -----------------------$ 9,800,000
Total liabilities --------------------$ 4,700,000
Net income ------------------------$ 420,000
Company consider an investment that has the same PE ratio as the firm. The cost of the investment is $640,000, and it will be financed with a new equity issue. The return on the investment will equal the company's current ROE.
Book value per share and the book value per share with the investment?
Book value per sare
Current$ 170.00
New$ 148.52
Market-to-book ratio and the market-to-book ratio with the investment?
Market-To-Book
Current .4353
New .4356
EPS and the EPS with the investment?
Earnings per share
Current $ 14.00
New $ 12.24
What is the NPV of this investment?
$ ______ ?
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International Finance Putting Theory Into Practice
Authors: Piet Sercu
1st edition
069113667X, 978-0691136677
