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.

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Definitions:

Color Vision Theory

A theory that explains how the human eye perceives color, typically involving the trichromatic theory and the opponent process theory.

Negative Color Afterimages

Visual illusions that occur when looking away after staring intently at a colored image for a period, resulting in seeing a complementary colored afterimage.

Phantom Limb Phenomenon

The sensation that an amputated or missing limb is still attached to the body and is moving appropriately with other body parts.

Human Retina

The light-sensitive layer of tissue at the back of the inner eye, which includes cells that convert light into neural signals for visual recognition.