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Question 7 1 pts Assume that you are in a perfect MM world (no taxes, no bankruptcy, etc...). A firm has 1000 shares outstanding, each
Question 7 1 pts Assume that you are in a perfect MM world (no taxes, no bankruptcy, etc...). A firm has 1000 shares outstanding, each of which is trading at $50. Although the firm has zero cash on hand, it plans to pay, at time 0, a dividend of $10 per share to existing shareholders, by raising new equity. Assume that the new shareholders will not receive the time-o dividend, but only future dividends (i.e., at time-1, time-2, etc...). How many new shares will the firm have to issue, and at what price per share? 250 shares at $50 each 200 shares at $50 each 250 shares at $40 each 200 shares at $40 each 1000 shares at $10 each
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