Use the Information for the Question(s) Below

question 69

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 choose not to use the $200 million to expand and hold the cash instead is closest to:

• A) $950 million
• B) $825 million
• C) $840 million
• D) $688 million