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.

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Definitions:

Cluster Suicides

Several suicides committed by members of a group within a brief period.

Major Depression

Feelings of hopelessness, lethargy, and worthlessness that last two weeks or more.

Clinical Depression

A serious mental health condition characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, often requiring medical treatment.

Rumination

The process of continuously thinking about the same thoughts, which tend to be sad or dark.