Use the Information for the Question(s) Below

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 value of Iota if they choose not to use the $200 million to expand and hold the cash instead is closest to:

A) $950 million
B) $825 million
C) $840 million
D) $688 million

Correct Answer:

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