Use the Information for the Question(s)below

question 79

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.Omicron's ex-dividend price is closest to:

• A)$40.00.
• B)$5.00.
• C)$50.00.
• D)$45.00.

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Definitions:

Psychodynamic Therapists

Mental health professionals who apply theories of psychoanalysis and psychodynamic psychology to treat patients.

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A class of psychoactive drugs used to treat conditions such as anxiety, insomnia, and seizures by enhancing the effect of the neurotransmitter GABA.

Antidepressant Drugs

Medications used to treat depression and other conditions by influencing neurotransmitter activity in the brain.

MAO Inhibitors

A class of medications used to treat depression by preventing the breakdown of monoamine neurotransmitters, enhancing mood.