Use the Information for the Question(s)below

question 83

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 price per share of Iota if they use the $200 million to expand is closest to:

• A)$13.75.
• B)$16.50.
• C)$19.00.
• D)$16.80.

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Definitions:

Mitosis

The process of cell division in eukaryotic cells that results in two genetically identical daughter cells.

Genetic Material

DNA or RNA molecules that carry the genetic instructions used in the growth, development, functioning, and reproduction of living organisms.

Fertilized Egg

A cell formed by the combining of a male and female gamete (sperm and egg) which then begins cell division to develop into an embryo.

Gametes

Reproductive cells (sperm in males and eggs in females) that carry half the genetic information of an individual and can combine to form a new organism.