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

Stock price	$	80
Number of shares		40,000
Total assets	$	7,600,000
Total liabilities	$	2,200,000
Net income	$	440,000

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.

Fill in the blanks:

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 $80 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 does occur in this case. Market value dilution does not occur in this case.

X Answer is complete but not entirely correct. 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 $80 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.) 8.15 X percent if we wanted the price after $ (325,926) X Accounting does dilution occur in this case. Market value dilution does not occur in this case