Assets Liabilities & Owners' equity Cash $15 Current liabilities $10 Other current assets 10 Long term debt 30 Fixed Assets 50 Equity 35 Total Assets $75 Total Liab & OE $75 The Board of Directors is currently looking to reward shareholders in one of the following ways; i) Pay a $10 million dividend ii) Issue $10 million of equity and use the proceeds to pay a $10 million dividend. iii) Split the stock 2:1. iv) Use the $10 million to repurchase equity. Discuss the implications of each alternative on business risk, cost of debt, debt/equity ratio, and market value of the firm. Also describe what happens to shareholder wealth for a shareholder owning 100 shares. Assume perfect markets. Create the table on the next page and complete it. What would you expect (Change, no change? If there is a change when?). This is not a numerical questi but one to explain. Business Cost of Debt/Equity Market Shareholder or Debt Ratio value of Wealth Operating firm Risk Pay dividend Issue equity Pay dividend Split stock Repurchase Equity