Google has 20 million shares outstanding with a current market price of $3 per share. Google announces an investment in a project where the initial investment in year 0 is $6 million and the cash inflow for the next five years will be $3 million, after which the investment will generate no cash flows. Google’s discount rate for this project is 8%. Find the dollar increase in Google’s share price due to the undergoing this investment

Google has 20 million shares outstanding with a current market price of $3 per share. Google announces an investment in a project where the initial investment in year 0 is $6 million and the cash inflow for the next five years will be $3 million, after which the investment will generate no cash flows. Google’s discount rate for this project is 8%. Find the dollar increase in Google’s share price due to the undergoing this investment

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 9P

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