Birds and More Is Considering a Project Which Requires the Purchase

question 39

Multiple Choice

Birds and More is considering a project which requires the purchase of $175,000 of fixed assets.The net present value of the project is $4,500.Equity shares will be issued as the sole means of financing this project.The price-earnings ratio of the project equals that of the existing firm.What will the new market value per share be after the project is implemented given the following current information on the firm?

• A)$18.68
• B)$18.72
• C)$18.80
• D)$19.20
• E)$21.10

---

Definitions:

Real Estate Mortgages

A secured loan agreement where the borrower pledges real estate property as collateral for the loan, which the lender can seize if the loan isn't repaid.

Consumer Loans

Financial loans given to individual borrowers for personal, family, or household purposes, as opposed to business or commercial loans.

Unconscionable Conduct

Behavior that is considered extremely unfair, unethical, or unjust within a transaction or contractual agreement, often leading to the invalidation of the agreement.

Restatement

A secondary legal document that aims to inform and clarify the current state of the law, often used as a reference by courts.