Khokhar Enterprises is a firm with two assets and no debt. It has surplus cash and equivalents of $50M and operating assets (including NWC) with a market value of $950M. It currently has 10M shares outstanding. On November 1 it announces its regular annual cash dividend of $3 per share (total dividend payout of $30M for 10M shares). It is the same dividend as the past few years and is always announced at this time of year. It will be paid to all shareholders of record as of end of business on Friday December 1 and will be distributed in the first week in January. The stock trades with a 2-day settlement/transfer period. a. Describe when and how the stock price will change to reflect the payment of this dividend? b. Suppose your entire portfolio consists of 1,000 shares of Khokhar Enterprises and $1,000 in a savings account. i. What is the value of your portfolio just prior to the announcement? ii. If capital markets are perfect, how does the dividend payment affect your total financial wealth and its composition? Explain. c. Suppose Khokhar Enterprises cancels the cash dividend payment and announces that over the same time period it will do an open market repurchase of 3% of its stock (300,000 shares) at $100 per share. i. In a world with no personal taxes are you excited or upset? ii. In a world with perfect capital markets, how will this repurchase affect the share price?