Axxelon is a listed company with 200 million shares outstanding. It has $250 million in cash and is expecting future free cash flow of $100 million per year in perpetuity. The management is planning to use the $250 million cash to finance an expansion. The expansion is expected to increase future free cash flows by 8%. As a result of this expansion, Axxelon is expected to incur costs of $15 million per year for 5 years, after which it will be zero. Alternatively, Axxelon can use the cash to undertake a share repurchase exercise. Assume Axxelons cost of capital is 10%

1. What will be the impact of these actions on Axxelons stock price? Advice Stark Inc. on the best course of action. (15 marks)

2. Discuss two (2) other factors Accelor should consider before deciding on the share repurchase or expansion. (5 marks)