Raise the required capital

Assignment Help Business Economics

Reference no: EM138123

Q. You are the CEO of Value-Added industries, Inc (VAI). Your firm has 10,000 shares of common stock outstanding, and the current price of the stock is $100 per share. There is no debt; therefore, marketplace value, balance sheet of VAI appears as follows: VAI market Value Balance Sheet ASSETS 1,000,000 Equity 1,000,000 You then discover an opportunity to invest in a new project that produces positive net cash flows with a present value of $210,000. Your initial costs for investing and developing the project are only $110,00. You will raise the necessary capital for this

A) What is the net present value of this project?

B) How many shares of common stock must be issued as well as at what price, to raise the required capital?

C) What is the effect, if any, of this new project on the value of the stock of the existing shareholders? Answers the question also shows the work on excel.

Reference no: EM138123

Questions Cloud

Person nominal income and their real income : Explain the difference between a person's nominal income and their real income. Why is real income more important to that person.

Terms of maintenance expense : What other variables should be considered when determining what is reasonable in terms of maintenance expense

Explain why the food stamp program : Explain why the food stamp program can have the same effect on the consumption pattern and well-being of recipients as an outright.

Such a price restriction : How would a law preventing landlords from charging above $900 give different results. What is such a price restriction called.

Raise the required capital : How many shares of common stock must be issued as well as at what price, to raise the required capital.

Evaluate the confidence interval for the slope : each person received was determined by randomization. For each person who was sent one of the surveys, the researcher recorded whether or not a completed survey was returned.

Compare with single versus multiple bidders : How do the buyer's returns compare with the method of payment, and how do they compare with single versus multiple bidders.

Net present value index : Calculate the following: Rate of Return and Calculate the following: Net Present Value Index

Evaluate the results of the regression equation : Evaluate the results of the regression equation tells managers and how it is likely to impact decisions made related to maximizing profitability.

User Account

All Pages