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Market-to-book ratio and the market-to-book ratio

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Reference no: EM132124455

The Company Metallica Heavy Metal Mining needs to diversify its operations. Some recent monetary information shown here:

Stock price--------------------$ 74 

Number of shares-------------30,000 

Total assets -------------------$ 9,800,000 

Total liabilities -----------------$ 4,700,000 

Net income ------------------------$ 420,000

Company consider 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 the company's current ROE.

a) Book value per share and the book value per share with the investment?

Book value per sare

Current $ 170.00 

New $ 148.52

b) Market-to-book ratio and the market-to-book ratio with the investment?

Market-To-Book

Current .4353

New .4356

c) EPS and the EPS with the investment?

Earnings per share

Current $ 14.00

New $ 12.24

d) What is the NPV of this investment?

$ --------- ?

Reference no: EM132124455

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