Use the Information for the Question(s)below

question 79

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 ex-dividend price is closest to:

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

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Definitions:

Thermoregulation

The process by which organisms maintain their internal body temperature within a physiological range despite external temperature changes.

Vitamin E Synthesis

The biochemical process by which organisms produce vitamin E.

Eccrine Sweat Gland

A type of sweat gland found throughout the body that regulates body temperature by releasing a watery sweat onto the surface of the skin.

Sebaceous Gland

A small oil-producing gland present in the skin of mammals, which secretes sebum into the hair follicles to lubricate the skin and hair.