Assume that Omicron uses the entire $50 million in excess cash to pay a special dividend.Omicron's ex-dividend price is closest to:

Question

Quizplus · Accepted Answer

D) Enterprise Value - PV(Future FCF) = 11ea7e5a_6ecf_7f8b_9a0a_fd2f377afe1b_TB1623_11 = $400 million
Market Value = Enterprise Value + cash = $400 + $50 = $450 million
However, once the $50 million in cash is used to pay the dividend, the new market value becomes $450 - $50 = $400 Million
Share price = 11ea7e5a_6ecf_7f8c_9a0a_d9cbc2cd94e0_TB1623_11 = 11ea7e5a_6ecf_a69d_9a0a_dbc814df2449_TB1623_11 = $40.00

Assume That Omicron Uses the Entire $50 Million in Excess