Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. your company has $1 million in free cash flows and

Your company has $1 million in free cash flows and is trying to determine how...

70.2K

Verified Solution

Question

Finance

Your company has $1 million in free cash flows and is trying to determine how to allocate that capital among organic growth dividends, and share buybacks. The company has the opportunity to engage in organic growth, which requires an investment of $1 million and has an NPV of $2.3 million. Alternatively, it can offer a $1 dividend to each of its one million shareholders. Or it could buy back 100,000 shares at $10 each. What should your company do?

A. use the $1 million for the organic growth project

B. Distribute $1 million in dividends

C. Distribute $1 million through a share buyback program

D. Offer a $0.50 dividend and use the remaining $500,000 to purchase 50,000 shares

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Suppose weights of olives that are class distributed with a mean weight of 7 5...

Basic Math
Q

You are considering making a movie. The movie is expected to cost 10.5 million up front...

Finance
Q

1.What is targeted mutagenesis? Why do you think it is essential for structure and function analysis...

Medical Sciences
Q

Using the following data set: 10, 5, 2, 7, 20, 3, 13, 15, 8, 9 Apply the...

Programming
Q

A glass prism of refractive index is kept in air as shown in the figure...

Physics
Q

Use the pop up below to find the area under the standard normal curve from...

Basic Math
Q

Suppose f x 7 10 a The rectangles in the graph on the left illustrate...

Calculus
Q

Chapter 1 Explain fully superior customer value and synergies. Explain fully corporate strategy...

Accounting
Q

the supplies account had a balance of $6500 on march 1, y6. $5400 of supplies...

Accounting
Q

Define fund in your own words and what is the purpose of fund accounting.

Accounting
Q

The Manufacturing Overhead account shows debits of $30,000, $24,000, and $28,000 and one credit for...

Accounting
Q

Pro forma financial statements are standardized statements required by the SEC and are a reliable...

Finance