Question: Question B4 (5 marks] Round your answers to 2 decimal places (only if necessary). Use the following information to answer the question(s) below. Assume that

 Question B4 (5 marks] Round your answers to 2 decimal places

Question B4 (5 marks] Round your answers to 2 decimal places (only if necessary). Use the following information to answer the question(s) below. Assume that Modigliani-Miller's perfect capital market conditions are met. Rockwood Industries has $40 million in excess cash and no debt. The firm expects to generate additional free cash flows of $50 million per year in subsequent years and will pay out these future free cash flows as regular dividends. Rockwood's unlevered cost of capital is 10% and there are 10 million shares outstanding. Rockwood's board is meeting to decide whether to pay out its $40 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock. Assume that you own 2500 shares of Rockwood stock and that Rockwood uses the entire $40 million to repurchase shares. Suppose you are unhappy with Rockwood's decision and would prefer that Rockwood used the excess cash to pay a special dividend. What is the number of shares that you would have to sell in order to receive the same amount of cash as if Rockwood paid the special dividend

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