[11 Points total] Answer the following questions: a) [6 Points] A firm has the following balance sheet composition: Assets Debt + Equity Surplus cash $ 1,000,000 $ 2,000,000 Debt Fixed assets and net working capital Total $ 10,000,000 $ 9,000,000 Equity $ 11,000,000 $ 11,000,000 # of shares outstanding 800,000 The firm is going to distribute the surplus cash, either through a dividend or a share repurchase. For each scenario (i.e. a dividend and a share repurchase) calculate the following: 1) 11) 111) The share price prior to the distribution If the distribution is done as a dividend payment, calculate the dividend per share, and the price per share after the distribution If the distribution is done as a share repurchase, calculate the number of shares outstanding after the distribution b) [5 Points] Assuming the conditions of the Miller & Modigliani (MM) hold, explain why issuing new shares to pay a dividend to current shareholders is financially equivalent to current shareholders selling a portion of their shares to new shareholders