Use the Information for the Question(s) Below

question 94

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 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

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Definitions:

Estrogen

A group of steroid hormones, which play an essential role in sexual and reproductive development primarily in females.

Cognitive Development

The construction of thought processes, including remembering, problem solving, and decision-making, from childhood through adolescence to adulthood.

Interindividual Variability

The fact that people do not age in the same way or at the same rate.

Multidirectionality

In the context of cognitive development, the fact that some aspects of intellectual functioning may improve while others remain stable or decline.