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i need mathematical explaination of this question please, no written explanation. i did the math I got the share price decrease by $1.5 and another
i need mathematical explaination of this question please, no written explanation.
i did the math I got the share price decrease by $1.5 and another answer says decrease by
$.50 i am confused. please details math steps and explanations are needed to understand this problem, along with a solution thank you
An all-equity firm has 100 million shares outstanding and $100 million in cash. The firm expects future free cash flows of $100 million per year. Management plans to use the $100 million cash to expand the firm's operations, which will in turn increase future free cash flows by 30%. If the cost of capital of the firm is 20%, and the expansion does not change the firm's cost of capital, how would a decision to use the cash for a share repurchase instead of the expansion change in share price ?
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