PAN AM Airlines earns free cash flow of $10M annually in perpetuity (the next FCF will be paid in 1 year) and has $4M in cash that it wants to use to repurchase stock. There are 0.6M shares outstanding. The current stock price is $90 and PAN AM wants to pay $100 a share to repurchase 40,000 shares. PAN AM is all equity financed and its shareholders require a return of 20%. Consider a shareholder with 100 shares before the repurchase. The shareholder sells 6.67 shares into the repurchase at $100 and keeps the remainder. What is the shareholder's change in wealth?

1. -$91
2. -$71
3. $0
4. $71
5. $91