Question
Omicron Technologies has $90 million in excess cash and no debt. The firm expects to generate additional free cash flows of $40 million per year
Omicron Technologies has $90 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 dividends. Omicrons unlevered cost of capital is 10% and there are 10 million shares outstanding. Omicron's board is meeting to decide whether to pay out its $90 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock.
A)Omicron's enterprise value is closest to:
B)Including its cash, Omicron's total market value is closest to:
C)Assume that Omicron uses the entire $90 million in excess cash to pay a special dividend. The amount of the special dividend is closest to:
D)Assume that Omicron uses the entire $90 million in excess cash to pay a special dividend. The amount of the regular yearly dividends in the future is closest to:
E) Assume that Omicron uses the entire $90 million in excess cash to pay a special dividend. Omicron's cum-dividend price is closest to:
F) Assume that Omicron uses the entire $90 million in excess cash to pay a special dividend. Omicron's ex-dividend price (Hint: ex-dividend price is the price that does not include the current dividend) is closest to:\
G) Assume that Omicron uses the entire $90 million to repurchase shares. The number of shares that Omicron will repurchase is closest to:
H) Assume that Omicron uses the entire $90 million to repurchase shares. The number of shares that Omicron will have outstanding following the repurchase is closest to:
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