Unsure about solving the following

Dear Monkeys,

Last night I was given the following to solve (See Below), which I did, but I am stressing out about whether i got the thing right.

I got question 1) ~2$ and 2) ~0,02$.

Could anyone show me how it is done correctly, and what answer you get?

Thanks in advance!!

Assignment: You have been asked to value a project for ABC. The project requires an investment outlay at t = 0 of $3,000,000. The project’s real after-tax cash flow (i.e. measured in the price level of t = 0) is estimated to be $600,000 per year for 6 years. ABC has asked you to use the following assumptions:

• Risk-free interest rate per year: 3 percent.
• Expected risk premium (on the market portfolio) per year: 5 percent.
• Asset beta of the project: 0.8.
• Corporate tax rate: 35%.
• Inflation per year: 2 percent.
• Part of the project’s investment outlay may be financed by issuing risk-free debt.
• Investment outlay is financed by ABC issuing bonds worth $1,500,000 and stocks worth
• $1,500,000.
• The project’s debt will be paid off over the project’s 6 year life: ABC has decided on an annual
• repayment of the principal of $1,500,000 / 6 = $250,000.
• ABC’s current stock price (before accepting the project): $30.
• ABC’s current number of stocks outstanding (before accepting the project): 50,000*

1. What is the expected change in ABC’s current stock price if the project is accepted?

2. Assume ABC incurs issue costs of (7 percent of $1,500,000 =) $105,000 to raise the $1,500,000 equity for the investment outlay. What is the expected change in ABC’s current stock price if the project is accepted?