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HotAir, Inc. announces that it is recalling one of its leading air bags from the market, owing to the flying shrapnel when the airbag is

  1. HotAir, Inc. announces that it is recalling one of its leading air bags from the market, owing to the flying shrapnel when the airbag is deployed. As a result, its future expected free cash flow to shareholders (the firm has no debt) will decline by $70 million per year for the next 8 years. HotAir has 30 million shares outstanding and an equity cost of capital of 7%. If this news came as a complete surprise to investors, what should happen to HotAirs stock price upon the announcement?

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