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 | $ | 64 | |
| Number of shares | 40,000 | ||
| Total assets | $ | 8,200,000 | |
| Total liabilities | $ | 4,000,000 | |
| Net income | $ | 700,000 | |
| MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $800,000, and it will be financed with a new equity issue. |
| |||||||
he offering to be $64 per share (assume the PE ratio remains constant), and the NPV of the investment would be
occur in this case. Market value dilution
| occur in this case.
|
Accounting dilution
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Money Talks Explaining How Money Really Works
Authors: Nina Bandelj ,Frederick F. Wherry ,Viviana A. Zelizer
1st Edition
0691202893, 978-0691202891
