Question
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: |
Stock price | $ | 70 | |
Number of shares | 25,000 | ||
Total assets | $ | 6,100,000 | |
Total liabilities | $ | 3,500,000 | |
Net income | $ | 770,000 | |
MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $700,000, and it will be financed with a new equity issue. (Do not round intermediate calculations.) |
The ROE on the investment would have to be percent --------?(Round your answer to 2 decimal places (e.g., 32.16).) if we wanted the price after the offering to be $70 per share (assume the PE ratio remains constant), and the NPV of the investment would be $ --------? (Leave no cells blank - be certain to enter "0" wherever required.). Accounting dilution (Click to select)does notdoes occur in this case. Market value dilution (Click to select)doesdoes not occur in this case. |
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