Use the Information for the Question(s)below

question 16

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 value of Iota if they do not use the $200 million to expand and hold the cash instead is closest to:

• A)$840 million.
• B)$825 million.
• C)$950 million.
• D)$688 million.

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Definitions:

Organic

Pertains to compounds containing carbon and typically found in living systems; also refers to food produced without the use of synthetic pesticides or fertilizers.

Gestalt Therapy

A style of psychotherapy that underlines the significance of self-responsibility while focusing on the client's present moment experiences, the bond between the client and therapist, the impact of a person's surroundings and social life, and the personal adjustments made in light of their unique situations.

Empty Chair

A therapeutic technique in which a client engages in a dialogue with an absent person or parts of themselves while using an empty chair to facilitate the conversation.

Wealth

A measure of the value of all the assets of worth owned by a person, community, company, or country.