Use the Information for the Question(s)below

question 8

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 cum-dividend price is closest to:

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

Understand the welfare implications of market equilibria and disequilibria.

Explain the relationship between commodity prices and surplus amounts.

Assess the impact of external factors on market equilibrium and surplus.

Analyze the effects of price changes on consumer and producer surplus.

---

Definitions:

Mental Willpower

The inner strength and self-discipline that allows an individual to face challenges, resist temptations, and adhere to personal goals and values.

Waypower

The perceived ability or pathway(s) an individual believes are available to achieve desired goals, often linked with the concept of hope or motivation.

Hope

A feeling of expectation and desire for a certain thing to happen, often associated with optimism and positive outcomes.

Quality Standards

Benchmarks of excellence and guidelines that organizations aim to meet in their products, services, or processes.