The Metallica Heavy Metal Mining (MHMM) Corporation wants todiversify its operations. Some recent financial information for thecompany is shown here:

Stock price	$	74
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 asthe firm. The cost of the investment is $800,000, and it will befinanced with a new equity issue. The return on the investment willequal MHMM’s current ROE.

a.	What is the current book value per share? The new book value pershare? (Do not round intermediate calculations and roundyour answers to 2 decimal places, e.g., 32.16.)
b.	What is the current EPS? The new EPS? (Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)
c.	What is the current market-to-book ratio? The newmarket-to-book ratio? (Do not round intermediatecalculations and round your answers to 4 decimal places, e.g.,.1616.)
d.	What is the NPV of this investment? (A negative answershould be indicated by a minus sign. Do not round intermediatecalculations and round your answer to the nearest whole dollaramount, e.g., 32.)

Does accounting dilution occur here?

• Yes

• No

Does market value dilution occur here?

• No

• Yes