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Carbondale Oil announces that a well that it has sunk in a new oil province has shown the existence of substantial oil reserves. The exploitation
Carbondale Oil announces that a well that it has sunk in a new oil province has shown the existence of substantial oil reserves. The exploitation of these resenves is expected to. increase Carbonde'e's tree cash flow by $100 milion per year for eight years. If investors had not been expecting this news, what is the most likely elfoct on Carbondale's slock price upon the announcement, given that Carbondale has 80 milion shares oustanding, no debt, and an equity cost of capital of 11% ? A. iss by $7.72 B. tise by $5.15 C. nise by $6.43 D. no effect
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