Fullerton Ltd. Invested RM 400 million in new industrial equipment. The present value of the future after-tax cash flows resulting from the equipment is RM 800 million. Fullerton currently has RM 250 million shares of common stock outstanding, with a current market price of RM 32 per share. Assuming that this project is new information and is independent of other expectation about the company, what is the theoretical effect of the new equipment on Fullerton’s stock price?

Fullerton Ltd. Invested RM 400 million in new industrial equipment. The present value of the future after-tax cash flows resulting from the equipment is RM 800 million. Fullerton currently has RM 250 million shares of common stock outstanding, with a current market price of RM 32 per share. Assuming that this project is new information and is independent of other expectation about the company, what is the theoretical effect of the new equipment on Fullerton’s stock price?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 7P

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