Financial Analysis In Tutorial Library

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TITLE: Financial Analysis

CLASS / COURSE: Finance

QUESTION DESCRIPTION:

Given the following situation, complete the analysis and prepare a 4-5 page report showing the computations and conclusions.

A company needs $10.0 million to finance a major project in the company. The company is expected to generate a total of $ 30.3 million in earnings next year with the addition of this project. The company currently has 5 million shares outstanding, with a price of $ 53 per share. Assume perfect capital markets. Complete the following actions:

a. If the $ 10.0 million needed for the project is raised by selling new shares, what will the forecast for next year's earnings per share be?

b. What is the firm's P/E if the company issues equity? What is the firm's forward P/E ratio if it issues debt? Explain the difference.

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SUBJECTS / CATEGORIES:
1. Finance
2. Financial Management
3. Accounting
4. Corporate Finance
5. Investment and Portfolio Management

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