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) Indifferent between options.

c) Cannot make decision.

d) Invest in project.