Garner Corporation is investing $ 30 million in new capital equipment. The present value of future after-tax cash flows generated by the equipment is estimated to be $ 50 million. Currently, Garner has a stock price of $ 28.00 per share with 8 million shares outstanding. Assuming that this project represents new information and is independent of other expectations about the company, what should the effect of the project be on the firm’s stock price()
A. The stock price will remain unchanged.
B. The stock price will increase to $ 30.50.
C. The stock price will increase to $ 31.75.
