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A month ago
Aerelon Airways, a commercial airline, suffers a major crash. As a result, passengers are considered to be less likely to choose Aerelon as their carrier, and it is expected free cash flows will fall by $20 million per year for five years. If Aerelon has 65 million shares outstanding, an equity cost of capital of 12%, and no debt, by how much would Aerelon's shares be expected to fall in price as a result of this accident?

▸ $1.45

▸ $1.28

▸ $1.11

▸ $0.98
Textbook 
Fundamentals of Corporate Finance
Edition: 2nd
Authors:
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A month ago
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$1.11
1
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A month ago
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