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:

Crystallized Intelligence

The ability to use knowledge that has been acquired through experience.

Metacognition

The ability to think about and understand one’s own cognitive processes and their effects.

Executive Functions

Cognitive processes including planning, problem-solving, and attention control, which are essential for goal-directed behavior.

Big Five

A theory describing human personality as composed of five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.