Metallica Heavy Metal Mining Corporation wants to diversify its operations. Some recent financials information on the company is listed below: Stock Price $73 # of Shares 40,000 Total Assets $ 7,600,000 Total Liabilities $2,200,000 Net Income $440,000 The company is considering an investment that has the same PE Ratio as the firm. The cost of investment is $800,000 and it will be financed with a new equity issue. The return on investment will equal the company's current ROE. Current Book Value Per Share $135.00 New Book Value Per Share $121.30 Current market To Books 5407 New Market to Books .5409 Current EPS $11.00 New EPS $9.89 What is the NPV of the investment? If negative please note with minus sign and be rounded to nearest who dollar.
Metallica Heavy Metal Mining Corporation wants to diversify its operations. Some recent financials information on the company is listed below: Stock Price $73 # of Shares 40,000 Total Assets $ 7,600,000 Total Liabilities $2,200,000 Net Income $440,000 The company is considering an investment that has the same PE Ratio as the firm. The cost of investment is $800,000 and it will be financed with a new equity issue. The return on investment will equal the company's current ROE. Current Book Value Per Share $135.00 New Book Value Per Share $121.30 Current market To Books 5407 New Market to Books .5409 Current EPS $11.00 New EPS $9.89 What is the NPV of the investment? If negative please note with minus sign and be rounded to nearest who dollar.
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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Transcribed Image Text:Metallica Heavy Metal Mining Corporation wants to diversify its operations. Some recent financials
information on the company is listed below: Stock Price $73 # of Shares 40,000 Total Assets $
7,600,000 Total Liabilities $2,200,000 Net Income $440,000 The company is considering an
investment that has the same PE Ratio as the firm. The cost of investment is $800,000 and it will be
financed with a new equity issue. The return on investment will equal the company's current ROE.
Current Book Value Per Share $135.00 New Book Value Per Share $121.30 Current market To Books
.5407 New Market to Books .5409 Current EPS $11.00 New EPS $9.89 What is the NPV of the
investment? If negative please note with minus sign and be rounded to nearest who dollar.
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