Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Q56 Not yet answered Apex Analytics is an all equity firm with 50 million shares outstanding. Apex has $30 million in cash, and expects future
Q56 Not yet answered Apex Analytics is an all equity firm with 50 million shares outstanding. Apex has $30 million in cash, and expects future free cash flows of $8 million per year. The cash can be used to expand the firm's future operations, increasing future free cash flows to $10 million per year. If Apex's cost of capital for the expansion is 8%, what will be the difference in the firm's share price compared to using the cash for a share repurchase? Marked out of 100 Flag question Select one: O A. Share price is the same with both options. O B. Share price is $0.50 higher with repurchase. O C. Share price is $0.50 higher with expansion O D. Share price is $0.10 higher with repurchase. O E. Share price is $0.10 higher with expansion
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