Firm C has the following: $50,000,000 $15,000,000 2,500,000 $20 $3,000,000 Firm C will take on a new project that costs $2,000,000. The project will be funded with a new equity issue and will have the same PE ratio as the firm. The expected ROE of the project is equal to the firm's current ROE. Calculate the new EPS1 if the investment is undertaken. Total Assets Total Liabilities Shares Outstanding Current Price Per Share Net Income $1.3 $1 $0.85 $0.7 $1.15
Firm C has the following: $50,000,000 $15,000,000 2,500,000 $20 $3,000,000 Firm C will take on a new project that costs $2,000,000. The project will be funded with a new equity issue and will have the same PE ratio as the firm. The expected ROE of the project is equal to the firm's current ROE. Calculate the new EPS1 if the investment is undertaken. Total Assets Total Liabilities Shares Outstanding Current Price Per Share Net Income $1.3 $1 $0.85 $0.7 $1.15
Chapter17: Multinational Capital Structure And Cost Of Capital
Section: Chapter Questions
Problem 12QA
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Question
Bb.9.
Transcribed Image Text:Firm C has the following:
Total Assets
Total Liabilities
Shares Outstanding
Current Price Per Share
Net Income
$50,000,000
$15,000,000
2,500,000
$20
$3,000,000
Firm C will take on a new project that costs $2,000,000. The project will be funded
with a new equity issue and will have the same PE ratio as the firm. The expected
ROE of the project is equal to the firm's current ROE. Calculate the new EPS1 if the
investment is undertaken.
$1.3
$1
$0.85
$0.7
$1.15
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