G
Gillani
Guest
No. Of Shares = 10,000
Current Stock Price = $100
There is no Debt therefore,
Assets 1,000,000 = Equity 1,000,000
You discovered a opportunity to invest in a new project that produces positive net cash flow with a present value of $210,000.your total initial costs for investing and developing this project is only $110,000.you will raise the necessary capital for this by issuing new equity.All potential purchases of your common stock will be fully aware of the project's value and cost,and are willing to pay''fair value'' for the new shares.
(A).what is the net present value of this project?
(B).how many shares of common stock must be issued,at what price,to raise the required capital?
(C).what is the effect,if any,of this new project on the value of the stock of the existing share holders?
Current Stock Price = $100
There is no Debt therefore,
Assets 1,000,000 = Equity 1,000,000
You discovered a opportunity to invest in a new project that produces positive net cash flow with a present value of $210,000.your total initial costs for investing and developing this project is only $110,000.you will raise the necessary capital for this by issuing new equity.All potential purchases of your common stock will be fully aware of the project's value and cost,and are willing to pay''fair value'' for the new shares.
(A).what is the net present value of this project?
(B).how many shares of common stock must be issued,at what price,to raise the required capital?
(C).what is the effect,if any,of this new project on the value of the stock of the existing share holders?