Use the Information for the Question(s)below

question 83

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 use the $200 million to expand is closest to:

• A)$13.75.
• B)$16.50.
• C)$19.00.
• D)$16.80.

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Definitions:

Middle Class

Describes a socio-economic group that falls between the working class and upper class, often characterized by moderate incomes, education levels, and occupations.

Upper Class

A social group at the top of a societal hierarchy which possesses more wealth, power, and prestige than other classes.

Working Class

A social group comprising individuals in manual-labor occupations or industrial work, often associated with lower socioeconomic status.

Occupational Prestige

The subjective evaluation people give to jobs as better or worse than others.