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:

Drinking Problems

Refers to issues or disorders related to excessive or unhealthy consumption of alcohol.

Intoxicating Effect

The outcome or impact of consuming substances that produce feelings of euphoria, reduced inhibition, and altered states of consciousness or perception.

Italian Americans

A group of Americans who have full or partial ancestry from Italy.

Binge Drinking

The consumption of an excessive amount of alcohol in a short period of time, typically leading to acute intoxication.