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Rexton Oil is an all-equity firm with 100 million shares outstanding. Rexton has US$150 million in cash and expects future free cash flows of US$65
Rexton Oil is an all-equity firm with 100 million shares outstanding. Rexton has US$150 million in cash and expects future free cash flows of US$65 million per year. The management plans to use the cash to expand operations, which will permanently increase future free cash flows by 12%. The cost of capital of Rexton's investments is 10%, and both the company and shareholders are exempt from taxes. How would a decision to use the cash for a share repurchase rather than for the expansion change Rexton's share price
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