Use the Information for the Question(s)below

question 16

Multiple Choice

Use the information for the question(s) below.
Iota Industries is an all-equity firm with 50 million shares outstanding.Iota has $200 million in cash and expects future free cash flows of $75 million per year.Management plans to use the cash to expand the firm's operations,which in turn will increase future free cash flows by 12%.Iota's cost of capital is 10% and assume that capital markets are perfect.
-The value of Iota if they do not use the $200 million to expand and hold the cash instead is closest to:

• A)$840 million.
• B)$825 million.
• C)$950 million.
• D)$688 million.

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Definitions:

Miscarriage

A spontaneous loss of a pregnancy before the 20th week.

Pregnancy Loss

The loss of a pregnancy before the baby is born, which can include miscarriage or stillbirth, often leading to emotional and psychological distress.

Annually

Referring to something that occurs once every year.

Euthanize

The act of humanely ending the life of a living being, typically to relieve severe pain or suffering, often referred to in the context of animals.