Question 4 Firm X has the following market value balance sheet (notice these are market values) $5 Cash Net Working Capital $25 Bonds outstanding S5 Common stock $15 PV of Future CFS $10 w N Who is likely to gain and who is likely to lose from the following maneuvers? (Assume that the risk-free rate is zero. Also suppose that the debt is risky). You may want to (but are not required to use numerical examples to support your conclusions. (a) Company X pays a cash dividend of $5 to its shareholders. (b) Company X halts operations, sells its fixed assets and converts net working capital into $15 cash Unfortunately, the fixed assets fetch only S6 on the second-hand capital goods market. The $26 cash is invested in Treasury Bills. (Here you can think of fixed assets as machinery that would produce future cash flows with PV= $10 if the firm kept operating Since the fixed assets are sold, these future cash flows will not be realized now)