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.

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