Omicron Technologies Has $60 Million in Excess Cash and No

question 52

Multiple Choice

Omicron Technologies has $60 million in excess cash and no debt. The firm expects to generate additional free cash flows of $48 million per year in subsequent years and will pay out these future free cash flows as regular dividends. Omicron's unlevered cost of capital is 10% and there are 12 million shares outstanding. Omicron's board is meeting to decide whether to pay out its $60 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock. Including its cash, Omicron's total market value is closest to ________.

• A) $432.00 million
• B) $648.00 million
• C) $1080.00 million
• D) $540.00 million

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Definitions:

Micelle

A spherical aggregate of surfactant molecules formed in a liquid colloid, important in various chemical and industrial processes.

Emulsion

A mixture of two or more liquids that are normally immiscible, with one liquid containing a dispersion of the other.

Phospholipids

A group of lipids essential to all cell membranes for their ability to create lipid bilayers.

Phosphatidate Core

The basic structure of phospholipids, consisting of a glycerol backbone, two fatty acid tails, and a phosphate group, crucial in membrane biology.