a. The value of Caraway's equity today if it pays out a $205,000 cash dividend today and plans to pay a $1.39 million liquidating dividends at the end of the year is _______? (round to the nearest dollar)

b. If Caraway's board of directors decides to pay a $615,000 dividend today to its existing shareholders using an equity offering selling new shares of common stock to raise the additional $410,000 it needs to make the cashdividend, the value of the existing shares of stock will be $____________? (round to the nearest dollar)

The value of the new shares will be $__________? (round to the nearest dollar)

(Related to Checkpoint 16.1) (Dividend irrelevance of the timing of cash dividends) The Caraway Seed Company sells specialty gardening seeds and products primarily to mail-order and Internet customers. The firm has $205,000 available for distribution as a cash dividend immediately and plans to shut down its business at the end of one year, at which time it will be prepared to pay a liquidating dividend of $1.39 million to the firm's stockholders The firm's shareholders require a 103 percent rate of return for investing in the all-equity-financed fim a. What do you estimate the value of Caraway's equity to be today if it pays out a $205,000 cash dividend today and plans to pay a $1.39 million liquidating dividend at the end of the year? b. If Caraway's board of directors decides to pay a $615,000 dividend today to its existing shareholders using an equity offering selling new shares of common stock to raise the additional $410,000 it needs to make the cash dividend, what will be the value of the existing shares of stock? The new shares? (Related to Checkpoint 16.1) (Dividend irrelevance of the timing of cash dividends) The Caraway Seed Company sells specialty gardening seeds and products primarily to mail-order and Internet customers. The firm has $205,000 available for distribution as a cash dividend immediately and plans to shut down its business at the end of one year, at which time it will be prepared to pay a liquidating dividend of $1.39 million to the firm's stockholders The firm's shareholders require a 103 percent rate of return for investing in the all-equity-financed fim a. What do you estimate the value of Caraway's equity to be today if it pays out a $205,000 cash dividend today and plans to pay a $1.39 million liquidating dividend at the end of the year? b. If Caraway's board of directors decides to pay a $615,000 dividend today to its existing shareholders using an equity offering selling new shares of common stock to raise the additional $410,000 it needs to make the cash dividend, what will be the value of the existing shares of stock? The new shares