In Problem 10, what would the ROE on the investment have to be if we wanted the price after the offering to be $75 per share? (Assume the PE ratio remains constant.) What is the NPV of this investment? Does any dilution take place?

Problem 10

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

Stock price ........................................   $ 75
Number of shares .......................   64,000
Total assets ............................. $9,400,000
Total liabilities ......................... $4,100,000
Net income ............................... $  980,000