Google has 20 million shares outstanding with a current market price of $3 per share. Google announces an investment in a project where the initial investment in year 0 is $6 million and the cash inflow for the next five years will be $3 million, after which the investment will generate no cash flows. Google’s discount rate for this project is 8%. Find the dollar increase in Google’s share price due to the undergoing this investment
Google has 20 million shares outstanding with a current market price of $3 per share. Google announces an investment in a project where the initial investment in year 0 is $6 million and the cash inflow for the next five years will be $3 million, after which the investment will generate no cash flows. Google’s discount rate for this project is 8%. Find the dollar increase in Google’s share price due to the undergoing this investment
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Google has 20 million shares outstanding with a current market price of $3 per share.
Google announces an investment in a project where the initial investment in year 0 is $6 million and the cash inflow for the next five years will be $3 million, after which the investment will generate no cash flows.
Google’s discount rate for this project is 8%.
Find the dollar increase in Google’s share price due to the undergoing this investment
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