Having some trouble with this. The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations.
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Question:
Having some trouble with this.
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:
Stock price $80
Number of shares40,000
Total assets $8,800,000
Total liabilities $5,100,000
Net income $900,000
The company is considering an investment that has the same PE ratio as the firm. The cost of the investment is $640,000, and it will be financed with a new equity issue.
The ROE on the investment would have to be_____ percent if we wanted the price after the offering to be $80 per share (assume the PE ratio remains constant), and the NPV of the investment would be $________
ROE INVESTMENT =
NPV OF INVESTMENT =
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