Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rational Demiconductor has the following market - value balance sheet: Rational Demiconductor Balance Sheet ( Market Values, in $ millions ) Surplus cash $ 3

Rational Demiconductor has the following market-value balance sheet:
Rational Demiconductor
Balance Sheet
(Market Values, in $ millions)
Surplus cash $ 3 $ 0.0 Debt
Fixed assets and net working capital 2932 Equity market capitalization (1 million shares at $32 per share)
$ 32 $ 32
Assume that Rational wins a lawsuit and is paid $2 million in cash. Its market capitalization rises by that amount. It decides to pay out $5 per share instead of $1 per share.
What happens to Rationals stock price if the payout comes as a cash dividend?
What happens to Rationals stock price if the payout comes as a share repurchase?
Note: Round your intermediate calculations to the nearest whole number.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions

Question

Describe the factors influencing of performance appraisal.

Answered: 1 week ago

Question

What is quality of work life ?

Answered: 1 week ago