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Suppose Pfizer announced it is pulling Viagra from the market due to newly discovered negative side effects. As a result, Pfizers future expected cashflow will
Suppose Pfizer announced it is pulling Viagra from the market due to newly discovered negative side effects. As a result, Pfizers future expected cashflow will decline by $850 million each year for the next 10 years. Assume Pfizer has 500 million shares outstanding, and its required rate of return is 8%. If the news came as complete surprise to investors, what should happen to Pfizers stock price upon the announcement?
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