QUESTION 2

"2) Rexton Oil is an all-equity firm with 1000 million of shares outstanding. Rexton currently has a cash flow of $450 Million of USDs and expects future free cash flows of $70 Millions per year. Management plans to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $98 Millions per year. If the cost of capital of Rexton's investments is 10%, calculate the stock price for the company if the expansion where to happen. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

QUESTION 3

"3) Rexton Oil is an all-equity firm with 1000 million of shares outstanding. Rexton currently has a cash flow of $450 Million of USDs and expects future free cash flows of $70 Millions per year. Management plans to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $98 Millions per year. If the cost of capital of Rexton's investments is 10%, calculate the stock price if the company decides to use the cash for a share repurchase rather than the expansion. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."