(NPV and shareholder wealth) Stockholders are surprised to learn that the firm has invested $43 million in a project that has an expected payoff of $8 million per year for six years. The project’s cost of capital is 12%.
1. What is the project’s NPV?
2. There are 3 million outstanding shares. What should be the direct impact of this investment on the per-share value of the common stock?
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