Okukuseku Electronics Gh (OEG), is a small company founded 10 years ago by electronics engineers Kanawu and Mempeasem. OEG manufactures integrated circuits to capitalize on the complex mixed-signal design technology and has recently entered the market for frequency timing generators, or silicon timing devices, which provide the timing signals or "clocks" necessary to synchronize electronic systems. Its clock products originally were used in PC video graphics applications, but the market subsequently expanded to include motherboards, PC peripheral devices, and other digital consumer electronics, such as digital television boxes and game consoles. OEG also designs and markets custom application specific integrated circuits (ASICs) for industrial customers. The ASIC's design combines analog and digital, or mixed-signal, technology. In addition to Kanawu and Mempeasem, Daakyebinti, who provided capital for the company, is the third primary owner. Each owns 25 percent of the 1 million shares outstanding. The company has several other individuals, including current employees, who own the remaining shares.

Recently, the company designed a new computer motherboard. The company's design is both more efficient and less expensive manufacture, and the OEG design is expected to become standard in many personal computers. After investigating the possibility of manufacturing the new motherboard, OEG determined that the costs involved in building the new plant would be prohibitive. The owners also decided that they were unwilling to bring in another large outside owner. Instead, OEG sold the design to an outside firm. The sale of the motherboard design was completed for an after tax payment of GHS 50,000,000.

QUESTIONS:

1. Kanawu believes the company should use the extra cash to pay a special one-time dividend. How will this proposal affect the stock price? How will it affect the value of the company?