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What is its free cash flow

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Question - An unlevered firm has 10,000 shares outstanding. Its free cash flow is a risk-free flat perpetuity. The firm is considering buying back half of its share with £50,000 perpetual risk-free debt. The risk-free interest rate is 6%. Assume this operation has no price impact and there is no corporate tax. If the firm breaks even in this operation, what is its free cash flow?

A. £500

B. £1,500

C. £3,000

D. £6,000

Reference no: EM132948709

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