Abc co with existing assets alone expects to generate


ABC Co. With existing assets alone expects to generate annual income of $50,000 perpetually. It has 30,000 shares outstanding now and plans to issue 4,500 new shares one year from now at a price of $8.00 per share. The company's investment opportunities are such that the return on the new equity capital is expected to be 20% per annum. If investors require an annual return of 10%, what is the present value of the company? Show your computations using two possible equity valuation methods and give each name of the valuation method before each computation. 

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Finance Basics: Abc co with existing assets alone expects to generate
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