Use the Information for the Question(s)below

question 28

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 to repurchase shares.The number of shares that Omicron will repurchase is closest to:

• A)1.0 million.
• B)1.2 million.
• C)1.1 million.
• D)0.9 million.

Calculate earnings per share under different financing plans.

Journalize bond redemption transactions and understand the financial implications.

Calculate the total interest expense over the life of bonds.

Understand and apply the straight-line method of bond discount/premium amortization.

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Definitions:

Political Party

An organized group that seeks to achieve political power by participating in electoral processes and promoting specific ideologies.

Fair-Minded

Characterized by impartiality and honesty; free from self-interest, prejudice, or favoritism.

Trustworthy

Deserving of trust or confidence, reliable and dependable in character, actions, and intentions.

Equity

The concept of fairness or justice in situations, ensuring fair treatment and distribution of resources among individuals or groups.