Last month, East Coast Power Company, which had been having trouble with cost overruns on a nuclear

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Last month, East Coast Power Company, which had been having trouble with cost overruns on a nuclear power plant that it had been building, announced that it was “temporarily suspending payments due to the cash flow crunch associated with its investment program.” The company’s stock price dropped from $28.50 to $25 when this announcement was made. How would you interpret this change in the stock price (that is, what would you say caused it)?

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Fundamentals of Corporate Finance

ISBN: 978-0071051606

8th Canadian Edition

Authors: Stephen A. Ross, Randolph W. Westerfield

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