Use the Information for the Question(s)below

question 43

Multiple Choice

Use the information for the question(s) below.
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 value of Iota if they use the $200 million to expand is closest to:

• A)$825 million.
• B)$688 million.
• C)$840 million.
• D)$950 million.

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Definitions:

Hunger

The physical sensation or condition driven by the body's need for nutritional intake.

Blood Levels

The amount or concentration of a particular substance in the blood, often measured to assess health or detect pathology.

Taste Buds

Sensory organs located on the tongue that allow for the perception of taste, including sweet, salty, sour, bitter, and umami flavors.

Insulin Levels

A measure of the amount of insulin, a hormone produced by the pancreas, present in the blood.