The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:

Stock price	$	40
Number of shares		30,000
Total assets	$	9,800,000
Total liabilities	$	4,700,000
Net income	$	420,000

MHMM is considering 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 ROE on the investment would have to be			?	percent
(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)				if we wanted the price after
the offering to be $40 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. Do not round intermediate calculations.)				. Accounting dilution	?
occur in this case. Market value dilution		?	occur in this case.	---------------------------

Problem 15-11 Dilution (LO3] The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 40 Number of 30,000 shares Total assets $9,800,000 Total liabilities $4,700,000 Net income $ 420,000 MHMM is considering 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. percent if we wanted the price after The ROE on the investment would have to be (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) the offering to be $40 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. Do not round intermediate calculations.) occur in this case. Market value dilution occur in this case. Accounting dilution