Question: A company is considering a project that would cost $4,000,000, which would be financed with the issue of new shares. Currently, the companys book value

A company is considering a project that would cost $4,000,000, which would be financed with the issue of new shares. Currently, the companys book value per share is $55 and its EPS is $3.50. If the company proceeds with the project, its EPS is expected to increase to $3.75. Assume the companys current PE ratio of 16 would remain constant. If the company proceeds with the project, what is expected to be its new market value per share? (show all calculations step by step PLEASE!)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Birdie Golf, Inc., has been in merger talks with Hybrid Golf Company for the past six months. After several rounds of negotiations, the offer under discussion is a cash offer of $352 million for...

116 3 A company is considering a project that would cost $3,000,000, which would be financed with the issue of new shares Currentlythe company's book was and its EPS is $120. If the company proceeds...

A company is considering a project that would cost $5,000,000, which would be financed with the issue of new shares. Currently, the company's book value pw share is $18 and its EPS is $065. If the...

1- A company is considering a project that would cost $6,000,000, which would be financed with the issue of new shares. Currently, the company has 1,500,000 shares outstanding that have a book value...

A company is considering a project that would cost $6,000,000, which would be financed with the issue of new shares. Currently, the company has 1,500,000 shares outstanding that have a book value of...

A company is considering a project that would cost $7,000,000, which would be financed with the issue of new shares. Currently, the company has 1,800,000 shares outstanding that have a book value of...

A company is considering a project that would cost $5,000,000, which would be financed with the issue of new shares. Currently, the companys book value per share is $18 and its EPS is $0.65. If the...

A company is considering a project that would cost $5,000,000, which would be financed with the issue of new shares. Currently, the company's book value per share is $18 and its EPS is $0.65. If the...

Calculate the p50 value for hemoglobin if YO2 = 0.82 when pO2 25 torr.

Froogle Enterprises is evaluating an unusual investment project. What makes the project unusual is the stream of cash inflows and outflows shown in the following table: Year Cash flow 0 ....... $...

What is the accuracy increments of the knee mill x Y and Z Crank dials? , 0 0 0 1 * 0 0 1 * * . 1 0 0 . 0 1 0

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".