Use the Information for the Question(s)below

question 87

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

• A)1.2 million.
• B)1.9 million.
• C)1.3 million.
• D)1.1 million.

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Definitions:

BrandDynamics Model

A framework used in marketing to assess and predict consumer loyalty and brand strength over time.

Millward Brown

A global market research agency known for its expertise in brand management and advertising effectiveness measurement.

Brand Strength

The extent of brand recognition and loyalty that a brand has, influencing its market performance.

Performance

The degree to which an individual, group, or organization meets its objectives and achieves results effectively and efficiently.