Dearman Incorporated’s current share price is $24.82, with 400,000 shares of stock outstanding. Suppose that Dearman announces that it will invest $875,000 cash in a new project that is expected to increase its free cash flow by $460,000 per year for the indefinite future. If Dearman’s weighted average cost of capital is 16 percent, how will this announcement affect its share price?

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