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The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 79 Number of shares 20,000 Total assets $ 4,500,000 Total liabilities $ 2,500,000 Net income $ 520,000 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? Yes No Does market value dilution occur here? Yes No
Which of the following statements about preferred stock is FALSE?
Mike purchased a sports shop for $186,000. His bank is willing to finance 75% of the purchase price. As part of the mortgage closing costs, Mike had to pay 3 1/4 discount points. How much did this amount to?
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A Treasury bond pays $1 million at the end of 20 years. What is its present value if the interest rate is 4%.
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Suppose that Texas Trucking (TT) has earnings per share of $3.55 and EBITDA of $55 million. TT also has 6 million shares outstanding and debt of $200 million (net of cash). Based upon the enterprise value to EBITDA ratio, the value of a share of Texa..
The investor is wondering what such a property must sell for after one year in order to earn a 20 percent return (IRR) on equity. What other issues must he consider?
The state of Arizona had 42,725 active patient care physicians in 2008 and by 2012 this number had grown to 47,663. What was the compound annual growth rate CAGR into the number of active care physicians during this period?
A project produces annual net income of $46,200, $51,800, and $62,900 over its 3-year life, respectively. The initial cost of the project is $675,000. This cost is depreciated straight-line to a zero book value over three years. What is the average a..
Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever.
If the firm wishes to maintain an average collection period of 50 days, what level of accounts receivable should it carry?
The Xerox Company paid a $3.00 dividend per share on its common stock this past year. This dividend represented a 40% payout ratio. Dividends are expected to grow at a 6% annual compound growth rate while earnings are expected to grow at a 10% growth..
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