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Omega Technologies has $50 million in excess cash and no debt. The firm expects to generate additional free cash flows of $40 million per year

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Omega 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 annual dividends. The first dividend is paid in one year. Omega's discount rate is 10% and there are 10 million shares outstanding. Omega'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. Assume that capital markets are perfect. Which of the following statements is(are) TRUE? Select one or more alternatives: If Omega's board has decided to pay out its $50 million in excess cash as a special dividend, the cum dividend share price is $40. Using the excess cash to repurchase shares gives shareholders a higher cash dividend now and lower cash dividends later, when compared to using the excess cash to pay a special dividend. Using the excess cash to repurchase shares gives shareholders higher cash dividends in the future, when compared to using the excess cash to pay a special dividend. If Omega's board has decided to pay out its $50 million in excess cash as a special dividend, the amount of special dividend is $5 per share and regular dividend in the future is $4 per share

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