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Natsam Corporation has a market value of RM 7.5 billion of which RM 250 million is of excess cash. The firm has 500 million shares
Natsam Corporation has a market value of RM 7.5 billion of which RM 250 million is of excess cash. The firm has 500 million shares outstanding with RM 500 million worth of debt on its balance sheet. Natsam's board has decided to pay out this cash as a one-time dividend. Assume perfect capital markets. a. Compute the current share price of Natsam Corporation. b. Calculate the ex-dividend price per share. c. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market what is the price of the shares once the repurchase is complete? d. Suppose the board of Natsam Corporation decided to do the share repurchase in (b), but you, as an investor, would have preferred to receive a dividend payment. Assuming you own 1,000 shares, how can you leave yourself in the same position as if the board had elected to make the dividend payment instead
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