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Homework answers / question archive / The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations
The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ 69 Number of shares 30,000 Total assets $ 8,700,000 Total liabilities $ 3,600,000 Net income $ 600,000 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. The return on the investment will equal MHMM's current ROE. a. What is the current book value per share? The new book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. What is the current EPS? The new EPS? (Do not round intermediate calculations and round your answers to 2 deplaces, e.g., 32.16.) c. What is the current market-to-book ratio? The new market-to-book ratio? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) d. What is the NPV of this investment? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.)
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