Let's assume that J&J announces that it is pulling its COVID-19 vaccine from the market, owing to the potential side effects associated with the vaccine. As a result, its future expected free cash...


Let's assume that J&J announces that it is pulling its COVID-19 vaccine from the market, owing to the potential side effects associated with the vaccine. As a result, its<br>future expected free cash flow would decline by $85 million per year for the next 10 years. J&J has 50 million shares outstanding, no debt, and an equity cost of capital<br>of 8%. If this news came as a complete surprise to investors, what should happen to J&J's stock price upon the announcement?<br>O A. Stock price should fall by $41.11 per share<br>O B. Stock price should rise by $11.41 per share<br>OC. Stock price should fall by $11.41 per share<br>OD. Stock price should rise by $41.11 per share<br>OE. Nothing would happen to the stock price, since financial markets in the US are reasonably efficient<br>

Extracted text: Let's assume that J&J announces that it is pulling its COVID-19 vaccine from the market, owing to the potential side effects associated with the vaccine. As a result, its future expected free cash flow would decline by $85 million per year for the next 10 years. J&J has 50 million shares outstanding, no debt, and an equity cost of capital of 8%. If this news came as a complete surprise to investors, what should happen to J&J's stock price upon the announcement? O A. Stock price should fall by $41.11 per share O B. Stock price should rise by $11.41 per share OC. Stock price should fall by $11.41 per share OD. Stock price should rise by $41.11 per share OE. Nothing would happen to the stock price, since financial markets in the US are reasonably efficient

Jun 11, 2022
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