Rational Demiconductor has at this moment one million shares outstanding and the
ID: 2639360 • Letter: R
Question
Rational Demiconductor has at this moment one million shares outstanding and the following market-value balance sheet:
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 $2 per share instead of $1 per share.
What happens to Rational
Rational Demiconductor Balance Sheet (Market Values, $ millions) Surplus cash $ 1.0 $ 0 Debt Fixed assets andnet working capital 10.0 11.0 Equity market capitalization
(1 million shares at $11 per share) $11.0 $11.0
Explanation / Answer
Rational Demiconductor has at this moment one million shares outstanding and the following market-value balance sheet:
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 $2 per share instead of $1 per share.
What happens to Rational
Rational Demiconductor Balance Sheet (Market Values, $ millions) Surplus cash $ 1.0 $ 0 Debt Fixed assets andnet working capital 10.0 11.0 Equity market capitalization
(1 million shares at $11 per share) $11.0 $11.0
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