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Rational Demiconductor has the following market value balance sheet: Surplus cash Rational Demiconductor Balance Sheet (Market Values, $ millions) $ 4 $ 0 Debt Equity
Rational Demiconductor has the following market value balance sheet: Surplus cash Rational Demiconductor Balance Sheet (Market Values, $ millions) $ 4 $ 0 Debt Equity market capitalization (1 million shares at $31 per 27 31 share) $ 31 $ 31 Fixed assets and net working capital Assume that Rational wins a lawsuit and is paid $3 million in cash. Its market capitalization rises by that amount. It decides to pay out $7 per share instead of $1 per share. a. What happens to Rational's stock price if the payout comes as a cash dividend? (Round your answer to the nearest whole number.) New stock price $ 25 b. What happens to Rational's stock price if the payout comes as a share repurchase? (Round your answer to the nearest whole number.) New stock price $
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