Assume that Omicron uses the entire $50 million in excess cash to pay a special dividend. The amount of the regular yearly dividends in the future is closest to ________
Omicron Technologies has $50 million in excess cash and no debt. The firm expects to generate additional free cash flows of $40 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 8% and there are 10 million shares outstanding. Omicron's board is meeting to decide whether to pay out its $50 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock.
A) $3.20
B) $4.80
C) $4.00
D) $8.00
Answer: C
You might also like to view...
Which of the following is a personal factor that influences a consumer's buying behavior?
A) life-cycle stage B) motivation C) status D) family E) social networks
The term ________ refers to the shared values, beliefs, and behaviors of a group of people.
Fill in the blank(s) with the appropriate word(s).
The term server-side refers to code that resides on the client machine.
Answer the following statement true (T) or false (F)
____________________ or directives moving downward from superiors to subordinates usually require little persuasion
Fill in the blank(s) with correct word