Use the Information for the Question(s)below

question 31

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 NPV of Iota's expansion project is closest to:

• A)-$110 million.
• B)-$137.5 million.
• C)$0.
• D)$75 million.

---

Definitions:

Limited Partner

A limited partner is an investor in a partnership who is not involved in the day-to-day management and whose liability is limited to the amount invested in the business.

LLLP

A Limited Liability Limited Partnership (LLLP) is a form of partnership that provides limited liability to all its partners, combining characteristics of limited partnerships and limited liability partnerships.

LLC

Limited Liability Company, a flexible form of business enterprise that blends elements of partnership and corporate structures, providing limited liability to its owners.

Distributed First

A priority method in which resources or items are distributed initially before other actions are taken.