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:

Birth Control

Methods or devices used to prevent pregnancy as part of family planning.

Sexual Activity

Any action that results in arousal or sexual gratification involving one or more people.

Discomfort

A mild to moderate state of physical or emotional unease, often less intense than pain.

Erectile Dysfunction

A medical condition characterized by the inability to achieve or maintain an erection suitable for sexual intercourse.