Omicron Technologies has $50 million in excess cash and no debt. The firm expects to generate additional free cash flows of $40 million per year in subsequent years and will pay out these future free cash flows as regular dividends. Omicron's unlevered cost of capital is 9% and there are 10 million shares outstanding. Omicron's board is meeting to decide whether to pay out its $50 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock. Assume that you own 2500 shares of Omicron stock and that Omicron uses the entire $50 million to pay a special dividend. Suppose you are unhappy with Omicron's decision and would prefer that Omicron used the excess cash to repurchase shares. The number of shares that you would have to buy in order to undo the special cash dividend that Omicron paid is closest to ________ shares.

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D) 11ea84dc_f500_4b01_9a63_15f1f95d51c5_TB1316_00_TB1316_00 11ea84dc_f500_7212_9a63_47f7bb66b1bd_TB1316_00_TB1316_00 However, once the $50 million in cash is used to pay the dividend, the new market value becomes 11ea84dc_f500_7213_9a63_7562b41ba06d_TB1316_00_TB1316_00 11ea84dc_f500_7214_9a63_cb6538da2fa5_TB1316_00_TB1316_00 Dividend per share = $50 million / 10 million shares = $5 per share
Dividends that you did not want to 11ea84dc_f500_9925_9a63_8f43a52a1ab8_TB1316_00_TB1316_00 11ea84dc_f500_9926_9a63_5965b051b352_TB1316_00_TB1316_00

Omicron Technologies Has $50 Million in Excess Cash and No