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An all-equity financed firm with 50 million shares outstanding has $100 million in cash and expects future cash flows of $40 million each year. The

An all-equity financed firm with 50 million shares outstanding has $100 million in cash and expects future cash flows of $40 million each year. The company plans to use the cash to expand the firms operations, which will in turn increase future free cash flows to $50 million each year. There are no market imperfections. If the cost of capital is 9%, how would a decision to use the $100 million in cash for a share repurchase rather than the expansion change the share price?

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