Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Airplane Inc is all equity financed and has 1 billion shares outstanding. Yesterday, Airplane Inc announced that they had received an order for five new
Airplane Inc is all equity financed and has 1 billion shares outstanding. Yesterday, Airplane Inc announced that they had received an order for five new airplanes. This was a surprise to the market, because it had not suspected this order. The share price of Airplane Inc the day before the order was 8 while the closing share price after the announcement was 9.5. In the same time period the market went up by 5%. Currently, the riskfree rate is zero and Airplane Incs beta is 1.5. What is the NPV of this new order according to the market?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started