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Roybus, Inc., a manufacturer of flash memory. just reported that its main production facility in Taiwan was destroyed in a fire. Although the plant was
Roybus, Inc., a manufacturer of flash memory. just reported that its main production facility in Taiwan was destroyed in a fire. Although the plant was fully insured the loss of production will decrease Roybus's free cash flow by $184 million at the end of this year and by $60 milion at the end of next year. b. Would you expect to be able to sell Royous steelwerghted average cost of capital of 12.8%, what change in Roybus's stock price would you expect upon this announcement? (Assume that the value of Roybuss debt is not affected by the event.) a. If Roybus has 40 milion shares outstanding and a stock on hearing this announcement and make a profit? Explain
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