Use the Information for the Question(s)below

question 22

Essay

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.
-Assume that you own 4000 shares of Omicron stock and that Omicron uses the entire $50 million to repurchase shares.Suppose you are unhappy with Omicron's decision and would have preferred that Omicron used the excess cash to pay a special dividend.Detail exactly how you could create a homemade dividend that will provide you with the same combination of cash and stock that you would have received if Omicron paid the special dividend.

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Definitions:

Group Territory

The physical or conceptual space that a group identifies as its own, often defending it against outsiders.

Decreasing Communication

A reduction in the frequency, quality, or effectiveness of interactions and information exchange between individuals or groups.

Overstaffing

The condition where there are more employees than necessary to perform a job efficiently, often leading to reduced productivity and increased costs.

Ambient Noise

Background sound that is constantly present in a particular environment, not focused on, but can impact the perception and behavior of individuals in that environment.