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Your CEO is considering an across the board reduction in prices that would reduce margins by 0.026 (260 basis points). The company currently has an ROE of 0.2185 earned from average equity of 43 Dividends are paid out at a rate of 0.65, the required rate of return for the firm is 0.2 and the components of ROE from the DuPont deconstruction are: Tax burden 0.72 Interest burden 0.86 EBIT margin 0.14 Asset turnover 1.8 Leverage ratio 1.4 The current value of the company's stock is 53.22. Assuming there is, or at least the market perceives there will be, no increase in sales to make up for the lost margin, what would happen to the intrinsic value of the company's stock? Provide the price change (decimal or %) as your answer." -0.3218 0 -0.3072 -0.2950 0 -0.2835 0 -0.2641 Your CEO is considering an across the board reduction in prices that would reduce margins by 0.026 (260 basis points). The company currently has an ROE of 0.2185 earned from average equity of 43 Dividends are paid out at a rate of 0.65, the required rate of return for the firm is 0.2 and the components of ROE from the DuPont deconstruction are: Tax burden 0.72 Interest burden 0.86 EBIT margin 0.14 Asset turnover 1.8 Leverage ratio 1.4 The current value of the company's stock is 53.22. Assuming there is, or at least the market perceives there will be, no increase in sales to make up for the lost margin, what would happen to the intrinsic value of the company's stock? Provide the price change (decimal or %) as your answer." -0.3218 0 -0.3072 -0.2950 0 -0.2835 0 -0.2641

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