Home / Questions / The Metallica Heavy Metal Mining (MHMM) Corporation wants todiversify its operations. Some
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The Metallica Heavy Metal Mining (MHMM) Corporation wants todiversify its operations. Some recent financial information for thecompany is shown here: |
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Stock price |
$ |
73 |
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Number ofshares |
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40,000 |
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Total assets |
$ |
7,600,000 |
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Totalliabilities |
$ |
2,200,000 |
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Net income |
$ |
440,000 |
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MHMM is considering an investment that has the same PE ratio asthe firm. The cost of the investment is $800,000, and it will befinanced with a new equity issue. The return on the investment willequal MHMM’s current ROE. |
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What is the current book value per share? The new book value pershare? (Do not round intermediate calculations and roundyour answers to 2 decimal places, e.g., 32.16.) |
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Current bookvalue |
$ per share |
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New book value |
$ per share |
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What is the current market-to-book ratio? The new market-to-bookratio? (Do not round intermediate calculations and roundyour answers to 4 decimal places, e.g., 32.1616.) |
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Currentmarket-to-book |
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Newmarket-to-book |
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What is the current EPS? The new EPS? (Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.) |
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Current earnings pershare |
$ |
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New earnings pershare |
$ |
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What is the NPV of this investment? (Negative amountshould be indicated by a minus sign. Do not round intermediatecalculations and round your answer to the nearest whole dollaramount, e.g., 32.) |
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NPV |
$ |
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Does accounting dilution occur here? |
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Does market value dilution occurhere? |
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