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v) Imagine the following scenario. Because of a catastrophic plane crash, the FAA announced that it is withdrawing its air worthiness certification for Fly by

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v) Imagine the following scenario. Because of a catastrophic plane crash, the FAA announced that it is withdrawing its air worthiness certification for Fly by Night Aviation's (FBNA) new four seat private plane. As a result FBNA's future expected free cash flows will decline by $40 million a year for the next eight years. FBNA has 20 million shares outstanding, no debt, and an equity cost of capital of 12%. If this news is a complete surprise to investors, what is the amount by which FBNA's stock price should fall upon the announcement? (7 marks)

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