Use the Information for the Question(s) Below

question 51

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

• A) $16.50
• B) $16.80
• C) $19.00
• D) $13.75

---

Definitions:

Variable

A characteristic, number, or quantity that can be measured or quantified and can vary among individuals or over time.

Multidimensional

Having several dimensions or aspects, which can refer to complex problems, diverse approaches, or objects with multiple variables.

Relaxed

Being in a state of rest or ease, free from tension, stress, or anxiety.

Standardized

Refers to a process, product, or procedure that has been made uniform across multiple applications or users to ensure consistency and comparability.