Use the Information for the Question(s)below

question 16

Multiple Choice

Use the information for the question(s) below.
Iota Industries is an all-equity firm with 50 million shares outstanding.Iota has $200 million in cash and expects future free cash flows of $75 million per year.Management plans to use the cash to expand the firm's operations,which in turn will increase future free cash flows by 12%.Iota's cost of capital is 10% and assume that capital markets are perfect.
-The value of Iota if they do not use the $200 million to expand and hold the cash instead is closest to:

• A)$840 million.
• B)$825 million.
• C)$950 million.
• D)$688 million.

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Definitions:

Human Brain

The central organ of the human nervous system, responsible for thought, memory, emotion, touch, motor skills, vision, respiration, temperature control, and other functions.

Nerve Cells

Also known as neurons, specialized cells in the nervous system that transmit information through electrical and chemical signals.

Human Nervous System

The part of the body that coordinates its voluntary and involuntary actions and transmits signals to and from different parts of its body.

Neurons

Electrically excitable cells in the nervous system that process and transmit information through electrical and chemical signals.