Question: Exercise 10 : Your company, which is mainly based in Paris, plans to relocate part of its offices in the provinces and to maintain, as

Exercise 10 :

Your company, which is mainly based in Paris, plans to relocate part of its offices in the provinces and to maintain, as far as possible, a part of the employees' telework activity for at least five years. This decision is expected to reduce operating costs by 200,000 per year.

1. If investors were not expecting this news, what would be the most likely effect on your companys share price at the time of the announcement, given that your company has 50,000 shares outstanding, no debt and a 10% cost of equity?

2. What is the most relevant discount rate when evaluating a business using the discounted cash flow method?

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