Use the Information for the Question(s)below

question 95

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 you own 2 500 shares of Vezuvo stock and that Vezuvo uses the entire $75 million to pay a special dividend. Suppose you are unhappy with Vezuvo's decision and would prefer that Vezuvo used the excess cash to repurchase shares. The number of shares that you would have to buy in order to undo the special cash dividend that Vezuvo paid is closest to:

• A)375.
• B)425.
• C)250.
• D)275.

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Definitions:

Secondary Emotion

Emotions that develop with more cognitive processing and social learning, such as guilt or shame, as opposed to primary emotions like happiness or fear.

Remorseful

Feeling deep regret or guilt for a wrongdoing, similar to being penitent or contrite.

Remorse

A deep feeling of regret or guilt for a wrong committed, often accompanied by a desire to amend or repair the harm caused.

Cannon-Bard

A theory of emotion that proposes that emotional and physiological responses to stimuli occur simultaneously rather than sequentially.