Lets 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&Js stock price upon the announcement? OA Stock price should fall by $41.11 per share O B. Stock prioce 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 E Nothing would happen to the stock price, since financial markets in the US are reasonably efficient

Lets 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&Js stock price upon the announcement? OA Stock price should fall by $41.11 per share O B. Stock prioce 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 E Nothing would happen to the stock price, since financial markets in the US are reasonably efficient

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 27P

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