Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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. Omicron's unlevered cost of capital is 10% and there are 10 million shares outstanding. Assume that Omicron uses the entire $50 million in excess cash to pay a special dividend. Omicron's cum-dividend price is closest to:
A.$5.00
B.$40.00
C.$50.00
D.$45.00
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started