Use the Information for the Question(s)below

question 56

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.
-Omicron's enterprise value is closest to:

• A)$500 million.
• B)$900 million.
• C)$450 million.
• D)$400 million.

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Definitions:

Formal Structures

The officially designated organization framework, often depicted in organizational charts, that dictates how tasks are divided, grouped, and coordinated.

Plan Components

The essential elements that make up a strategic or operational plan, including objectives, strategies, measures, and timelines.

Objective

A goal or aim that is clearly defined and measurable.

Action Statement

A clear, concise declaration outlining a specific action to be taken to achieve a particular objective.