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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 use the $200 million to expand is closest to:
Slightly Regressive
Refers to a tax system or policy that places a relatively higher tax burden on low-income earners compared to high-income earners, but the difference is not pronounced.
Excise Tax
A tax directly levied on specific goods or services, such as tobacco or gasoline, usually to discourage their use or generate revenue.
Highly Inelastic
A situation where the demand or supply for a good or service is insensitive to changes in its price.
Highly Elastic
Describes a situation where the supply or demand for a product or service changes significantly in response to changes in price.
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