Jargon Jen has five million shares outstanding, generates free cash flows of $12 million each year and has a cost of capital of 6%. It also has $3 million of cash on hand. Jargon Jen wants to decide whether to repurchase stock or invest the cash in a project that generates free cash flows of $0.5 million each year. Should Jargon Jen invest or repurchase the shares?

Answer rating: 100% (QA)

To determine whether Jargon Jen should invest in the project or repurchase shares we need to evaluate the impact on shareholder value First lets calcu... View the full answer