QUESTION 4: (30 marks) a) Ranhill Berhad, an unlevered firm, currently has an enterprise value of $500 million and $150 million in excess cash. The firm has 15 million shares outstanding. Suppose Ranhill uses its excess cash to repurchase shares. After the share repurchase, news will come out that will change Ranhill's enterprise value to either $700 million or $300 million. i. What is Ranhill's share price prior to the share repurchase? (4 marks) ii. What would Ranhill's share price be after the repurchase if its enterprise value goes up? (4 marks) iii. What would Ranhill's share price be after the repurchase if its enterprise value declines? BFN 2034 (BBA) JULY, 2020 CONFIDENTIAL 4/5 (4 marks) iv. Suppose Ranhill waits until after the news comes out to do the share repurchase. What would Ranhill's share price be after the repurchase if its enterprise value goes up? What would Ranhill's share price be after the repurchase if its enterprise value declines? (6 marks) b) Describe the dividend distribution process, including the importance of the declaration date, date of record, and ex-dividend date. Use an example to describe. (12 marks)