Use the Information for the Question(s)below

question 95

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 decide not to use the $200 million to expand and hold the cash instead is closest to:

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

---

Definitions:

Defenses

Psychological strategies used unconsciously to protect oneself from anxiety or discomfort.

Unconditional Positive Regard

A concept in client-centered therapy where the therapist accepts and supports the client no matter what they say or do, facilitating openness and self-improvement.

Distorted

Distorted encompasses ideas, perceptions, or representations that are twisted, misrepresented, or altered from their original form or truth.

Statistical Determinism

The theory that future outcomes can be predicted with certainty based on statistical laws and past events.