Use the Information for the Question(s)below

question 25

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.
-Including its cash,Omicron's total market value is closest to:

• A)$500 million.
• B)$900 million.
• C)$400 million.
• D)$450 million.

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Definitions:

Bureaucratic Culture

A type of organizational culture characterized by formal procedures, hierarchical structure, and clear division of responsibilities.

Standard Operating Procedures

Detailed, written instructions designed to achieve uniformity of the performance of a specific function or operation within an organization.

Organizational Culture

Refers to the shared values, beliefs, and practices that shape how work is done within an organization.

Harley-Davidson

An American motorcycle manufacturer known for its heavyweight motorcycles designed for cruising on highways.