Use the Information for the Question(s)below

question 57

Multiple Choice

Use the information for the question(s) below.
Vezuvo Technologies has $75 million in excess cash and no debt. The firm expects to generate additional free cash flows of $50 million per year in subsequent years and will pay out these future free cash flows as regular dividends. Vezuvo's unlevered cost of capital is 10% and there are 10 million shares outstanding. Vezuvo's board is meeting to decide whether to pay out its $75 million in excess cash as a special dividend or to use it to repurchase the firm's shares.
-Assume that Vezuvo uses the entire $75 million in excess cash to pay a special dividend. Vezuvo's cum-dividend price is closest to:

• A)$55.00.
• B)$57.50.
• C)$40.00.
• D)$47.50.

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Definitions:

Sufficiently Researched

Having been subject to adequate scientific investigation and analysis to substantiate claims or effectiveness.

Systematic Gestalt

A therapeutic approach combining systematic and methodical procedures with Gestalt therapy's focus on present moment awareness and wholesomeness.

Empirical Support

Evidence that is based on observation, experiment, or experience, rather than theory or pure logic.

Humanistic Therapy

A therapeutic approach emphasizing empathy and the importance of individual choice and potential, focusing on the client's experience in the present moment.