Use the Information for the Question(s)below

question 42

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.
-A firm has $75 million of assets that includes $12 million of cash and 25 million shares outstanding. If the firm uses $12 million of cash to repurchase shares, what is the new price per share?

• A)$1
• B)$2
• C)$3
• D)$4

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Definitions:

Depolarized

A state in which sodium ions flow to the inside of the cell membrane, making the outside less positive. Depolarization occurs when a neuron responds to stimuli such as heat, pressure, or chemicals.

Nerve Impulse

Electrochemical messages transmitted from neurons to other neurons and effectors.

Cerebrum

The biggest section of the brain, which is in charge of voluntary muscle movement, sight, speech, taste, auditory processing, cognition, and memory.

Lumbar Puncture

A medical procedure where a needle is inserted into the lower part of the spinal column to collect cerebrospinal fluid, used for diagnostic purposes.