What is the per-share stock price-california real estate inc

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California Real Estate, Inc., expects to earn $65 million per year in perpetuity if it does not undertake any new projects. The firm has an opportunity to invest $12 million today and $4 million in one year in real estate. The new investment will generate annual earnings of $10 million in perpetuity, beginning two years from today. The firm has 10 million shares of common stock outstanding, and the required rate of return on the stock is 10 percent. Land investments are not depreciable. Ignore taxes. What is the per-share stock price if the firm undertakes the investment?

Reference no: EM132615898

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