Alsand oil is an all equity firm with 100 million shares, Ask an Expert

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Alsand oil is an all equity firm with 100 million shares outstanding. Alsand has $150million in cash and expects future free cash flow of $65 million per year. Management plans to use the cash to expand the firms operations, which will in turn increase future free cash flow by 12%. If the cost of capital of Alsand investment is 10%, how would a decision to use the cash for a share repurchase rather than the expansion change the share price? Why?

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Financial Management, Finance

Category:- Financial Management
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