Rational Demiconductor has the following market-value balance sheet:

Rational Demiconductor Balance Sheet (Market Values, in $ millions)
Surplus cash	$	8		$	0.0	Debt
Fixed assets and net working capital		25			33	Equity market capitalization (1 million shares at $33 per share)
	$	33		$	33

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 $9 per share instead of $1 per share. a. What happens to Rationals stock price if the payout comes as a cash dividend?

b. What happens to Rationals stock price if the payout comes as a share repurchase? (Round your intermediate calculations to the nearest whole number.)

Here are key financial data for House of Herring, Inc.:

Earnings per share for 2025	$6.45
Number of shares outstanding	41.9	million
Target payout ratio	40	%
Planned dividend per share	$2.58
Stock price, year-end 2025	$ 125

House of Herring plans to pay the entire dividend early in January 2026. All corporate and personal taxes were repealed in 2024.

1. a. Other things equal, what will be House of Herrings stock price after the planned dividend payout? (Round your answer to 2 decimal places.)

2. b-1. Suppose the company cancels the dividend and announces that it will use the money saved to repurchase shares. Will the stock price change due to the announcement?

3. b-2. Assume that investors learn nothing about the companys prospects from the announcement. How many shares will the company need to repurchase? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

Suppose that, instead of canceling the dividend, the company increases dividends to $6.45 per share and then issues new shares to recoup the extra cash paid out as dividends. Again, assume investors learn nothing from the announcement about House of Herrings prospects.

1. c-1. What happens to the with-dividend share price?

2. c-2. What happens to the ex-dividend share price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

3. c-3. How many shares will need to be issued? (Do not round intermediate calculations. Enter your answer in whole numbers not in millions. Round your answer to the nearest whole number.)

Check my work Rational Demiconductor has the following market value balance sheet: Rational Demiconductor Balance Sheet (Market Values, in $ millions) Surplus cash $ 8 $ 0.0 Debt Equity market capitalization Fixed assets and net working capital 25 33 (i million shares at $33 per share) $ 33 $ 33 Skipped 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 $9 per share instead of $1 per share. a. What happens to Rational's stock price if the payout comes as a cash dividend? New stock price b. What happens to Rational's stock price if the payout comes as a share repurchase? (Round your intermediate calculations to the nearest whole number.) Check my work 2 Earnings per share for 2025 Number of shares outstanding Target payout ratio Planned dividend per share Stock price, year-end 2025 $6.45 41.9 million 40 % $2.58 $ 125 Skipped House of Herring plans to pay the entire dividend early in January 2026. All corporate and personal taxes were repealed in 2024. a. Other things equal, what will be House of Herring's stock price after the planned dividend payout? (Round your answer to 2 decimal places.) b-1. Suppose the company cancels the dividend and announces that it will use the money saved to repurchase shares. Will the stock price change due to the announcement? b-2. Assume that investors learn nothing about the company's prospects from the announcement. How many shares will the company need to repurchase? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Suppose that, instead of canceling the dividend, the company increases dividends to $6.45 per share and then issues new shares to recoup the extra cash paid out as dividends. Again, assume investors learn nothing from the announcement about House of Herring's prospects. C-1. What happens to the with-dividend share price? c-2. What happens to the ex-dividend share price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c-3. How many shares will need to be issued? (Do not round intermediate calculations. Enter your answer in whole numbers not in