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Company announcement of the investment

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You purchased 100 shares in oil company, Vic Energy Ltd at the price of $ 50/share. The company has 1 million shares outstanding. Ten days later Vic Energy announced an investment in an oil field in east Victoria. The probability that the investment will be successful and generate an NPV of $ 10 million is 0.2; the probability that the investment will be a failure and generate a negative NPV of negative $ 1 million is 0.8. How would you expect the share price to change upon the company's announcement of the investment?

Reference no: EM131478488

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