On June 10, Year 1, Burton Builders, Inc., a publicly traded company, announced that it had been awarded a contract to build a football stadium at a contract price of $500 million. This contract would increase its projected revenues by 20% over the next three years. Which of the following statements is correct with regard to this announcement?
A) The market price of Burton's stock will probably be higher on June 11, Year 1 than on June 10th.
B) Burton's net cash flow from operations will increase by 20% over the next three years.
C) Burton's assets should be increased by $500 million on June 10, Year 1 to recognize this contract.
D) Burton's net income will increase by 20% over the next three years.
Correct Answer:
Verified
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