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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 50 Number of shares

The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:

 

       
Stock price $ 50  
Number of shares   25,000  
Total assets $ 6,100,000  
Total liabilities $ 3,800,000  
Net income $ 450,000  
 

 

MHMM is considering 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. (Do not round intermediate calculations.)

 

The ROE on the investment would have to be percent ?? (Round your answer to 2 decimal places (e.g., 32.16).) if we wanted the price after the offering to be $50 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.). Accounting dilution does occur in this case. Market value dilution does not occur in this case.

Sep 08 2020 Read more Less More

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