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:

Qualitative Methods

Research approaches that focus on understanding aspects of human behavior and the reasons that govern such behavior through observational and interpretational techniques.

Needs Assessment

A systematic process for determining and addressing needs, or gaps between current conditions and desired conditions.

Focus Groups

A research method involving guided discussions with a group of people to gather their opinions on a specific subject.

Normative Needs

Needs that are considered standard or expected within a given cultural or societal context.