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 | $ | 50 | |
Number of shares | 50,000 | ||
Total assets | $ | 8,100,000 | |
Total liabilities | $ | 4,900,000 | |
Net income | $ | 750,000 | |
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 (Round your answer to 2 decimal places. (e.g., 32.16)) if we wanted the price after the offering to be $50 per share (assume the PE ratio still 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 OR does not occur in this case. Market value dilution (Click to select)does OR does not occur in this case. |
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