Use the Information for the Question(s)below

question 7

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 have outstanding following the repurchase is closest to:

• A)8.7 million.
• B)9.0 million.
• C)8.8 million.
• D)9.2 million.

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Definitions:

Autonomic Nervous System

The part of the nervous system that controls involuntary actions of the body, such as heart rate, digestion, and respiratory rate.

Voluntary Movements

Voluntary movements are conscious, intentional motor activities controlled by the brain, such as walking, speaking, and writing.

Cerebral Gyri

The ridges or folds on the surface of the cerebral hemisphere of the brain, increasing its surface area to facilitate neural processing.

Cortex

The outer layer of an organ or structure, such as the brain or kidney, involved in various functions depending on the specific organ.