Use the Information for the Question(s)below

question 90

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.The amount of the special dividend is closest to:

• A)$5.00.
• B)$9.00.
• C)$4.00.
• D)$4.50.

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Definitions:

Tapeworm

A parasitic flatworm, belonging to the class Cestoda, that lives in the digestive tracts of vertebrates as adults and often causes intestinal diseases.

Mutualism

A symbiotic relationship between two species in which both species benefit from the interaction, contributing to their survival and well-being.

Parasitism

A relationship between two species where one organism (the parasite) lives on or in another organism (the host), causing it harm but usually not immediate death.

Nourishment

The substances necessary for growth, health, and good condition, often referred to in the context of food and nutrition.