Prada Has Ten Million Shares Outstanding, Generates Free Cash Flows

question 14

Multiple Choice

Prada has ten million shares outstanding, generates free cash flows of $ 50 million each year and has a cost of capital of 10%. It also has $50 million of cash on hand. Prada wants to decide whether to repurchase stock or invest the cash in a project that generates free cash flows of $5 million each year. Should Prada invest or repurchase the shares?

• A) indifferent between options
• B) repurchase
• C) invest
• D) cannot say for sure

Understand the concept and applications of frequency distributions.

Grasp the significance and use of flowcharts in diagramming processes.

Identify and explain various distribution types, including normal and standard normal distributions.

Comprehend the calculation and interpretation of standard deviation.

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Definitions:

Stereotypes

Oversimplified generalizations about a group of people, often ignoring individual differences and based on assumptions rather than facts.

Social Schemas

Cognitive frameworks that help individuals organize and interpret information about the social world based on their personal experiences.

Cognitive Process

The mental action or process of acquiring knowledge and understanding through thought, experience, and the senses, including aspects such as perception, memory, and judgment.

Overgeneralizations

A cognitive bias involving broad conclusions or rules based on a single event or piece of evidence.