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:

Return Metrics

Key performance indicators used to evaluate the efficiency or profit generated from investments, marketing activities, or other business operations.

Outcomes

The results or consequences of actions, often used in the context of evaluating the effectiveness of interventions or strategies.

Success

Generally refers to the achievement of a set goal, target, or objective.

SMART Framework

The SMART Framework is a set of criteria used for setting clear, achievable goals, ensuring they are Specific, Measurable, Achievable, Relevant, and Time-bound.