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Rational Demiconductor has at this moment one million shares outstanding and the following market-value balance sheet: Rational Demiconductor Balance Sheet (Market Values, $ millions) Surplus
Rational Demiconductor has at this moment one million shares outstanding and the following market-value balance sheet:
Rational Demiconductor Balance Sheet (Market Values, $ millions) | ||||
Surplus cash | $ 1.0 | $ 0 | Debt | |
Fixed assets and net working capital | 10.0 | 11.0 | Equity market capitalization (1 million shares at $11 per share) | |
$11.0 | $11.0 | |||
Assume that Rational wins a lawsuit and is paid $1 million in cash. Its market capitalization rises by that amount. It decides to pay out $2 per share instead of $1 per share. |
a. | What happens to Rational |
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