#$6.$ Panther Corp. currently has two divisions $-$ a health insurance division and a hospital

division. Next year's expected revenue for the health division is $$630$mil. and the expected

unlevered cash flow for the division is $$420$ mil. Next year's expected revenue for the hospital

division is $$330$ mil. and the expected unlevered cash flow for the division is $$220$ mil..

Revenues and cashflows for the health care division are expected to grow at a $4\%$ rate per year in

perpetuity and the revenues and cash flows for the hospital division are expected to grow at $3\%$

rate per year in perpetuity. Both division's have a weighted average cost of capital of $9\%.$ The

ratio of unlevered cashflows to revenues of both divisions is expected to remain constant over

time. Panther Corp. has $100$ mil. shares outstanding and $$2$ bil. in debt.

Because of fractured relationships with doctors and competitive dynamics with other health

insurers, management believes that if the hospital division is spun off, next year's expected

revenues for hospitals will experience a $22\%$ increase relative to the division's revenues without

a spinoff. After this one$-$time sharp increase, hospital revenues will growth thereafter at the

regular $3\%$ rate. Nothing else will change in a spinoff, except there will be a one$-$time

immediate cost to execute the spinoff of $$95$ million arising from legal, consulting, and banking

fees. Suppose a rumor of this spinoff is leaked to the market and the market believes that there is

a $75\%$ chance that the rumor is valid and that the firm will soon announce the spinoff. What

would you expect for the change in Panther's stock price when the rumor is first leaked to the

market?