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(Solution Download) The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent f


 

 

 

 

 

 

 

The Metallica Heavy Metal Mining (MHMM) Corporation wants to

 

diversify its operations. Some recent financial information for the

 

company is shown here:

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Stock price$70
  Number of

 

shares

25,000
  Total assets$6,100,000
  Total

 

liabilities

$3,500,000
  Net income$770,000

 

   

 

 

 

 

 

 

 

 

MHMM is considering an investment that has the same PE ratio as

 

the firm. The cost of the investment is $700,000, 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

 

$70 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 (Click to select)doesdoes not occur in this case. Market

 

value dilution (Click to select)does notdoes occur in this

 

case.

 

 


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