Suppose Stephenson decides to issue equity to finance the purchase. 1. What is the net present value of the project ? 2. Construct Stephenson's market value balance sheet after it announces that the firm will finance the purchase using equity. What would be the new price per share of the firm's stock? How many shares will Stephenson need to issue to finance the purchase? 3. Construct Stephenson's market value balance sheet after the equity issue but before the purchase has been made. How many shares of common stock does Stephenson have outstanding? What is the price per share of the firm's stock?

Answer rating: 100% (QA)

1 To calculate the net present value of the project we would need information on the initial investm... View the full answer