b) For an upfront cost of $12 million dollars, the CEO of Totally Legit promises to develop a drug with amazing potential. Though it will take 8 years before any cash flows are expected, he predicts that after-tax cash flows for each year after that will be $10 million per year for 10 years. Currently, the firm's shares (priced at $11.25 each) are expected to pay an annual dividend of $0.92 next year, with dividend growth expected to average 5.5% from that point forward. If there are 10,000,000 shares outstanding for Totally Legit, estimate the percent price increase that this announcement should generate. (2 marks)

b) For an upfront cost of $12 million dollars, the CEO of Totally Legit promises to develop a drug with amazing potential. Though it will take 8 years before any cash flows are expected, he predicts that after-tax cash flows for each year after that will be $10 million per year for 10 years. Currently, the firm's shares (priced at $11.25 each) are expected to pay an annual dividend of $0.92 next year, with dividend growth expected to average 5.5% from that point forward. If there are 10,000,000 shares outstanding for Totally Legit, estimate the percent price increase that this announcement should generate. (2 marks)