Use the Information for the Question(s)below

question 8

Multiple Choice

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 Omicron uses the entire $50 million in excess cash to pay a special dividend.Omicron's cum-dividend price is closest to:

• A)$50.00.
• B)$40.00.
• C)$5.00.
• D)$45.00.

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Definitions:

Classical Approach

A theory in management and organizational studies focusing on formal structure, hierarchy, and efficiency principles derived from early 20th-century industrial management practices.

Leadership Approach

Involves the strategies, styles, and techniques used by a leader to inspire and guide the direction, operation, and work culture of a group or organization.

Nonverbally Communicate

The process of conveying a message or information without the use of spoken words, through gestures, facial expressions, and body language.

Organization's Culture

Refers to the shared values, beliefs, and the set of practices that characterize an organization and shape its employees' behavior.