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Samsung International has rice fields in California that are expected to produce average annual profits of $800,000 in real terms forever. Samsung has no depreciable assets and is an all equity firm with 200,000 shares outstanding. The appropriate discount rate for its stock is 12%. Samsung has an investment opportunity with a gross present value of $1M. The investment requires a $400,000 outlay now. Samsung has no other investment opportunities. Assume all cash flows are received at the end of each year. What is the price per share of Samsung?

Financial Management, Finance

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