If investors had not been expecting this news what is the


PC World is expected to generate free cash flows of $20 million over the next 10 years, after which free cash flows are expected to grow at a rate of 4% per year. A major fire broke out at one of PC World's three factories. As a result, PC World's free cash flow is expected to fall by $5 million per year for the next five years. The stock price before the announcement is $30 per share and the firm has 10 million shares outstanding. PC World had a WACC of 10% before the fire, it is expected that PC World's WACC will increase by 1% after the fire. If investors had not been expecting this news, what is the new stock price upon the announcement?

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Financial Management: If investors had not been expecting this news what is the
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