✦ in theory, the positive NPV of an investment that a company makes causes the price of the company’s stock to rise.
✦ to calculate the new stock price after the investment project is undertaken, you add the project’s NPV to the market capitalization (equity market) and divide it by the number of shares outstanding.
✦ in reality, stock price changes are the result of the expected change in the Net Present Value of the company when the project is announced to the public.
✦ if Analysts declare an expected NPV related to the project that is lower than the NPV announced, the stock price could even drop.
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