7. Dividends, repurchases, and firm value Aa Aa E Remember that the primary goal of a firm is to maximize shareholder wealth by increasing the firm's intrinsic value. It is thus important to understand the impact of distributions-both in the form of dividends or stock repurchases on the firm's value. Terracon Environmental currently has no debt. Recently, the company sold off one of its divisions, from which it received $10 million (extra cash). The company is now considering the repurchase of shares. The current stock price is $10 with 1.5 million shares outstanding for a total market capitalization of $15 million. Terracon has no other financial assets. Based on the above information, calculate the value of Terracon Environmental's operations (Vop). $8 million $10 million $5 million $7 million Based on your understanding of stock repurchases, identify whether the following statement is true or false: The value of operations depends on whether a firm decides to make distributions in the form of dividends or stock repurchases. depend on how the This statement is because, ignoring possible tax effects and signals, the value of a firm's operations firm distributes its residual earnings