Question: Please help me with this question 1. Johnson Inc. wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt.

Please help me with this question

1. Johnson Inc. wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $50 per share, but the book value per share is $20. Net income for Johnson is currently $12 million. The new facility will cost $20 million, and it will increase net income by $800,000. Johnson raises stock at the current price to finance the facility. Assume a constant priceearnings ratio. Does book value dilution occur?

Group of answer choices

a. book value dilution occurs.

b. book value dilution does not occur.

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