Corporation wants to diversify its operations

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Reference no: EM132000194

The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 80 Number of shares 40,000 Total assets $ 7,600,000 Total liabilities $ 2,200,000 Net income $ 440,000 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 ROE on the investment would have to be percent (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) if we wanted the price after the offering to be $80 per share (assume the PE ratio remains constant), and the NPV of the investment would be $ (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.). Accounting dilution occur in this case. Market value dilution occur in this case.

Reference no: EM132000194

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