You are the CFO of a company that has 10 million shares outstanding, generates Free Cash Flows
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Question:
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-Invest in project.
c-Indifferent between options.
d-Cannot make decision.
Related Book For
Accounting
ISBN: 978-1337899451
27th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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