Question
Use the following information for Q4-Q7. A firm has no debt. Existing assets generate earnings (E) of $35 million per year forever. Discount rate is
Use the following information for Q4-Q7.
A firm has no debt. Existing assets generate earnings (E) of $35 million per year forever. Discount rate is 14%. Firm has 12.5 million shares (n). Now firm plans to invest I=$15 million in a new project. The new project will generate $14 million in new earnings forever per year.
Q4. What is the (new) value of the firm with this new project?
| $300 mil. | ||
| $350mil. | ||
| $85mil. | ||
| $250mil. | ||
| $335mil. |
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Your Financial Well Being How To Get Your Financial Well Being With Smart Spending Habits
Authors: Fransisca Patten
1st Edition
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