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Rational Demiconductor has the following market-value balance sheet: Rational Demiconductor Balance Sheet (Market Values, S millions) Surplus cash $ 8 $ 0 Debt Equity market
Rational Demiconductor has the following market-value balance sheet: Rational Demiconductor Balance Sheet (Market Values, S millions) Surplus cash $ 8 $ 0 Debt Equity market capitalization (1 million shares at $30 per 22 30 share) $ 30 $ 30 Fixed assets and net working capital 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? (Round your answer to the nearest whole number.) New stock price 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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