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For this question, continue to use the annual discount rate of 10% to discount FCFFS. EMD, under the leadership of Edna Mode, its CEO,
For this question, continue to use the annual discount rate of 10% to discount FCFFS. EMD, under the leadership of Edna Mode, its CEO, decides to invest in a new line of dress suits, tentatively called "No Capes" because of their innovative design that removes the classical cape. This investment will not affect the FCFFS above but will result in the following additional per share free cash flows, shown for each December 31: 2021 (Today) 2022 2023 2024 2025 2026 FCFFs from new line of suits -3 -3 -3 -3 -3 That is, the investment into the "No Capes" line of suites will require a cash outflow of $3 per share annually for five years. The first such outflow will be incurred today and the next four will be incurred exactly one, two, three, and four years from today. Thereafter, the investment will start paying off: all free cash flows starting with the cash flow exactly five years from today will be $X per share higher than they were without the new line of suites. Upon the public announcement of the details of this investment, the per-share price of EMD goes up by $3.4 per share. Assume that the markets are correct and this is indeed the full and correct price reaction to the news. What is the value of X? Enter your answer in dollars per share, rounding to two decimal places. For example, if you find that X is $12.345, enter your answer as 12.35 (without the dollar sign). You Answered 0 Correct Answer 2.33 margin of error +/- 0.1
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