(Solution) - Dividends and stock price go back to the first Rational -(2025 Original AI-Free Solution)

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Dividends and stock price go back to the first Rational Demiconductor balance sheet one more time. Assume that Rational does not win the lawsuit (see Problem 5) 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?
In Problem 5
Go back to the first Rational Demiconductor balance sheet. Now 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. Explain what happens to Rational's stock price if