Use the Information for the Question(s)below

question 19

Multiple Choice

Use the information for the question(s) below.
Iota Industries is an all-equity firm with 50 million shares outstanding. Iota has $200 million in cash and expects future free cash flows of $75 million per year. Management plans to use the cash to expand the firm's operations, which in turn will increase future free cash flows by 12%. Iota's cost of capital is 10% and assumes that capital markets are perfect.
-The value of Iota, if they use the $200 million to expand, is closest to:

• A)$688 million.
• B)$840 million.
• C)$950 million.
• D)$825 million.

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Definitions:

Partnerships

A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed.

Voting Rights

Legal rights established to protect individuals' abilities to participate in the electoral process, ensuring their votes are cast and counted accurately.

Classes of Partners

This term refers to the different roles or types of partners within a partnership, such as general partners, who have unlimited liability, and limited partners, who have liability restricted to their investment.

Implied Authority

Authority that is not explicitly defined but is assumed to be granted as part of an agent's role or duties.