Your all-equity firm has beta of 2.0 and a free cash flow today of $10M. The firm is expected to produce a perpetual free cash flow of $12M per year starting next year that grow at rate of 1 percent per year. Assume a risk free rate of 3.0 percent and an expected market risk premium of 6.0 percent. Your firm has 7M shares outstanding. If your firm repurchases $25M worth of shares, how many shares will your firm repurchase?

2,500,000

2,312,673

1,828,822