The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: |
Stock price | $ | 81 | |
Number of shares | 20,000 | ||
Total assets | $ | 6,400,000 | |
Total liabilities | $ | 4,000,000 | |
Net income | $ | 760,000 | |
MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $600,000, and it will be financed with a new equity issue. The return on the investment will equal MHMM’s current ROE. |
What is the current book value per share? The new book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
Current book value | $ per share |
New book value | $ per share |
What is the current market-to-book ratio? The new market-to-book ratio? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) |
Current market-to-book | |
New market-to-book | |
What is the current EPS? The new EPS? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
Current earnings per share | $ |
New earnings per share | $ |
What is the NPV of this investment? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) |
NPV | $ |
Does accounting dilution occur here? |
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Does market value dilution occur here? | ||||
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Current book value per share:
Total Stockholders' Equity = Total Assets - Total Liabilities
To calculate the NPV, the number of years is required to calculate the Present Value Factors which is missing in the question, hence, NPV is not calculated.
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial informa...
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 74 Number of shares 40,000 Total assets $ 8,200,000 Total liabilities $ 4,000,000 Net income $ 700,000 MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $800,000, and it will be financed with a new equity issue. The return on the investment will equal...
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 81 Number of shares 20,000 Total assets $ 6,400,000 Total liabilities $ 4,000,000 Net income $ 760,000 MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $600,000, and it will be financed with a new equity issue. The return on the investment will equal...
15-10 Dilution [LO3] he Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ Number of hares Total assets $9,400,000 Total liabilities $4,100,000 Net income 980,000 75 64,000 MHMM is considering an investment that has the same PE ratio as the firm. The cost the investment is $1,500,000, and it will be financed with a new equity issue. The return on the investment will equal MHMM's...
he all-equity firm Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 69 Number of shares 30,000 Total assets $ 8,700,000 Total liabilities $ 3,600,000 Net income $ 600,000 MHMM 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 return on the investment...
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 35 Number of shares 25,000 Total assets $ 8,800,000 Total liabilities $ 2,400,000 Net income $ 510,000 MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $700,000, and it will be financed with a new equity issue. The ROE on the investment...
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 40 Number of shares 30,000 Total assets $ 8,000,000 Total liabilities $ 3,500,000 Net income $ 360,000 The company is considering an investment that has the same PE ratio as the firm. The cost of the investment is $750,000, and it will be financed with a new equity issue. (Do not round intermediate calculations.)...
Problem 15-11 Dilution [LO3] (3.) The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 56 Number of 20,000 shares Total assets $6,200,000 Total liabilities $3,000,000 Net income $ 410,000 MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $700,000, and it will be financed with a new equity issue. percent if we wanted...
The all-equity firm Metallica Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 74 Number of shares 30,000 Total assets $ 9,800,000 Total liabilities $ 4,700,000 Net income $ 420,000 MHMM 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 return on the investment will equal MHMM’s current...
Wayne, Inc., wishes to expand Its facilities. The company currently has 5 million shares outstanding and no debt. The stock sells for $36 per share, but the book value per share Is $8. Net income is currently $4 million. The new facility will cost $45 million, and It wll Increase net Income by $780,000. Assume a constant price-earnings ratio. a-1. Calculate the new book value per share. (Do not round intermediate calculations and round your answer to 2 declmal places,...
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