You are the CEO of a company. You have 10,000 shares of common stock outstanding, and the current price of the stock is $100 per share. There is no debt and the balance sheet shows Assets and Equity both equal to $1,000,000.

You then discover an opportunity to invest in a new project with a Present Value of $210,000 and produces positive cash flows. Your total initial costs are $110,000. You will raise the necessary capital by issuing new equity. All potential purchasers of your common stock will be fully aware of the project's value and cost, and they are willing to pay fair value for the new shares of the VAI common.

1. What is the Net Present Value of this project?

2. How many shares of common stock must be issued (at what price) to raise the required capital?

3. What is the effect of this new project on the value of the stock of the existing shareholders?