Because of a Catastrophic Plane Crash,the FAA Announced That It

question 5

Multiple Choice

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,then the amount that FBNA's stock price should fall upon the announcement is closest to:

• A)$2.00.
• B)$16.00.
• C)$16.70.
• D)$9.90.

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Definitions:

Auditory Communication

The transmission and reception of information or messages through sound, important in various species for purposes such as mating calls, warnings, and social interaction.

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, famously demonstrated by Pavlov's dogs experiment.

Ivan Pavlov

A Russian physiologist known for his work in classical conditioning, demonstrating the basic mechanisms of learning through his experiments with dogs.

Female Cardinal

A female bird of the Cardinalidae family, characterized by less vivid coloring than the male, usually with shades of brown, gray, and red accents.