Assume perfect capital market.An all equity firm has Rs.6000 in cash and assets worth Rs.28000.The firm has 1200 shares outstanding and no investment oppertunities.
a. If the firm pays no dividend today,what is the price and wealth of stockholders?
b. If the firm pays a dividend of Rs.6000 today.
i. What is the stock price before dividend?
ii. What is the stock price after dividend?
iii. What is the wealth of stockholders after the dividend?
c. If the firm pays a dividend of Rs.9000 today.
i. What is the stock price before dividend?
ii. What is the stock price after dividend?
iii. How many new shares must be issued?
iv. How does the dividend affect stockholder wealth?