Question
You are the CFO of a company that has 10 million shares outstanding, generates Free Cash Flows of $50 million every year and has a
You are the CFO of a company that has 10 million shares outstanding, generates Free Cash Flows of $50 million every year and has a WACC of 10%. The company has no debt and excess cash of $50 million.
You are tasked with deciding whether to use the excess cash to repurchase shares or invest in a new project which will generate additional Free Cash Flows of $5 million per year.
What is your recommendation?
a-Repurchase shares.
b-Invest in project.
c-Indifferent between options.
d-Cannot make decision.
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Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
27th edition
978-1337272094, 1337272094, 978-1337514071, 1337514071, 978-1337899451
