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.

Understand the exemptions from registration requirements under securities laws.

Comprehend the role and application of blue-sky laws in securities regulation.

Understand the key legislative acts regulating corporate securities and their issuing companies.

Recognize the oversight mechanisms established to regulate public accounting firms and to ensure transparency and accountability.

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Definitions:

Related Party Disclosures

Financial reporting requirements that mandate entities to disclose transactions and relationships between the reporting entity and its related parties.

Control

In the context of financial reporting, control refers to the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Shareholding

The ownership interest represented by holding shares of stock in a company.

Subsidiaries

Companies that are controlled by another company, known as the parent company, through the ownership of more than half of their voting stock or through other control mechanisms.