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:

Sequence of Reactions

A series of chemical reactions carried out in a specific order to obtain a desired final product.

Transformation

The process by which one chemical compound is converted into another through a chemical reaction.

Organic Chemistry

A branch of chemistry that studies the structure, properties, composition, reactions, and preparation of compounds containing carbon.

Tert-butanol

A tertiary alcohol with the chemical formula \(C_4H_{10}O\), used as a solvent and in the manufacture of other chemicals, known for its high reactivity.