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.

---

Definitions:

Business Strategies

Approaches and plans implemented by a business to achieve its goals and secure a competitive position in the market.

Organizational Strategies

Plans or approaches developed by businesses to achieve long-term goals and improve their position in the marketplace.

Multinational Corporation

A firm that has extensive involvement in international business, owning or controlling facilities in more than one country.