Question: Individual Assignment 3 Rational Demiconductor Balance Sheet ($ millions) Surplus cash $ 1.0 $ 0 Debt Fixed assets and net working capital 10.0 11.0

Individual Assignment 3 Rational Demiconductor Balance Sheet ($ millions) Surplus cash $

Individual Assignment 3 Rational Demiconductor Balance Sheet ($ millions) Surplus cash $ 1.0 $ 0 Debt Fixed assets and net working capital 10.0 11.0 Equity market capitalization (1 million shares at $11 per share) $11.0 $11.0 Suppose that Demiconductor pays out only $0.5 million in cash. a. What will happen to the value of the company if it pays it out as a dividend? What if it pays it out by repurchasing stock? b. What will happen to the price per share if it pays the money out as a dividend? What if it is paid out by a stock repurchase?

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