Multiple Choice
Use the information for the question(s) below.
Iota Industries is an all-equity firm with 50 million shares outstanding.Iota has $200 million in cash and expects future free cash flows of $75 million per year.Management plans to use the cash to expand the firm's operations,which in turn will increase future free cash flows by 12%.Iota's cost of capital is 10% and assume that capital markets are perfect.
-The NPV of Iota's expansion project is closest to:
A) -$110 million.
B) -$137.5 million.
C) $0.
D) $75 million.
Correct Answer:

Verified
Correct Answer:
Verified
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