Prada Has Ten Million Shares Outstanding, Generates Free Cash Flows

question 37

Multiple Choice

Prada has ten million shares outstanding, generates free cash flows of $50 million each year and ha? a cost of capital of 10%. It also has $50 million of cash on hand. Prada wants to decide whether to repurchase shares or invest the cash in a project that generates free cash flows of $5 million each year. Should Prada invest or repurchase the shares?

• A) repurchase
• B) invest
• C) indifferent between options
• D) cannot say for sure

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Definitions:

Ideal Self

A person's conception of how they would like to be, often serving as a standard for self-guidance and evaluation.

Actual Self

The self-concept that comprises the traits and characteristics that a person acknowledges they currently possess.

Conflict

A situation or process in which individuals or groups perceive a threat to their needs, interests, or concerns and may involve physical, emotional, or ideological opposition.

Life Story Approach

The Life Story Approach is a method in psychological research and therapy that emphasizes the importance of understanding an individual's personal narrative and experiences to comprehend their behavior and mental processes.