PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 16, Problem 13PS

Payout policy in perfect capital markets Go back to the first Rational Demiconductor balance sheet one more time. Assume that Rational does not win the lawsuit (see Problem 12) and is left with only $1 million in surplus cash. Nevertheless Rational decides to pay a cash dividend of $2 per share. What must Rational do to finance the $2 dividend if it holds its debt and investment policies constant? What happens to price per share?

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