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You purchased 90 shares of stock in an oil company, Wildhorse Energy, Inc., at $50 per share. The company has 1.20 million shares outstanding. Ten
You purchased 90 shares of stock in an oil company, Wildhorse Energy, Inc., at $50 per share. The company has 1.20 million shares outstanding. Ten days later, Wildhorse Energy announced an investment in an oil field in east Texas. The probability that the investment will be successful and generate an NPV of $11 million is 0.20; the probability that the investment will be a failure and generate an NPV of negative $1 million is 0.80. How would you expect the stock price to change upon the companys announcement of the investment?
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