Prada has nine million shares outstanding generates free

Reference no: EM13620917

Prada has nine million shares outstanding, generates free cash flows of $ 40 million each year and has a cost of capital of 10%. It also has $30 million of cash on hand. Prada wants to decide whether to repurchase stock or invest the cash in a project that generates free cash flows of $5 million each year, forever. Should Prada invest or repurchase the shares?

Reference no: EM13620917

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