Use the Information for the Question(s)below

question 73

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.
-Vezuvo's enterprise value is closest to:

• A)$500 million.
• B)$450 million.
• C)$400 million.
• D)$600 million.

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Definitions:

Enforced

Implemented or applied forcefully or compulsorily, often referring to rules, policies, or laws.

Quality-Of-Life Management

The practice of enhancing employees' job satisfaction, well-being, and overall quality of life through organizational policies, work environment improvements, and wellness programs.

Profit Maximizing

The process or strategy of adjusting the production and sale of goods or services to achieve the highest possible profit.

Ethical Climates

The prevailing perceptions of the typical practices and procedures that reflect the ethical standards of an organization.