The risk free rate is 5%. Aquarius Corporation, Arizona-based manufacturer of healing power crystals, has existing assets generating certain cash flows of $231 million next year. A new exciting investment opportunity has surfaced, the rights to the book Find Your Seventh Chakra. The project would costAquarius $100 million and generates a single certain cash flow of $136:5 million next year. Aquarius has no cash on hand, and is considering financing the investment by issuing new shares. Aquarius CURRENTLY has 2 million shares outstanding.

a) (5 points) How big of an equity stake must be given to the NEW shareholders in order to raise the required $100 million? (Note: Find a MINIMUM percentage required so that new shareholders just get fair return on capital).

b) (5 points) What is the value of the equity stake held by the CURRENT shareholders after the deal? How much do current shareholders benefit from the deal?c) (5 points) How many new shares must be issued, and at what price will they be sold?

c) (5 points) How many new shares must be issued, and at what price will they be sold?