Use the Information for the Question(s)below

question 89

Multiple Choice

Use the information for the question(s) below.
Omicron Technologies has $50 million in excess cash and no debt.The firm expects to generate additional free cash flows of $40 million per year in subsequent years and will pay out these future free cash flows as regular dividends.Omicron's unlevered cost of capital is 10% and there are 10 million shares outstanding.Omicron's board is meeting to decide whether to pay out its $50 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock.
-Assume that Omicron uses the entire $50 million to repurchase shares.The number of shares that Omicron will have outstanding following the repurchase is closest to:

• A)8.8 million.
• B)1.2 million.
• C)9.0 million.
• D)8.9 million.

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Definitions:

Caregiver

An individual who provides care for another person who is unable to care for themselves due to illness, disability, or age.

Socioemotional Development

The process of developing the ability to understand and manage emotions, along with forming relationships and social skills.

Erikson's Theory

A psychosocial development theory by Erik Erikson that outlines eight stages of psychological development from infancy to adulthood.

Trust

The belief in the reliability, truth, ability, or strength of someone or something, fostering a sense of security and safety.