Let Rocksteady Industries be an all-equity firm in a Modigliani-Miller world with 500 shares outstanding and a cost of equity of rE = 0.15. Suppose that it has announced a dividend of 12 per share equal to its expected annual earnings. (a) (5) Calculate the stock price and total value of the firm. (b) (5) Suppose that Rocksteady realizes lower than expected of earnings of 3, 000, but does not expect this to impact its future cash flows. It does not want to reduce its dividend, and decides to issue new shares to make up the difference. How many new shares will be issued and at what price? What is the payoff to existing shareholders? (c) (5) Suppose that Debbie owns 100 shares and disagrees with the firm’s policy of maintaining a dividend of 12, preferring instead to receive a lower payout than have her shares diluted. What could she do to achieve her desired outcome? (d) (5) Now suppose that Rocksteady instead realizes higher than expected earnings of 9, 000. It decides to keep the dividend at 12 and use the remainder to buy back shares. How many shares will be repurchased and at what price? What is the payoff to the remaining shareholders? (e) (5) Once again, Debbie is dissatisfied by the firm’s policy and would have preferred a proportionally higher dividend to the buyback. How many shares should she sell back to the firm to replicate her desired outcome?

Identify one agency, bureau or department within the federal government responsible for upholding regulations that impact business operations. A few examples are the Environmental Protection Agency (EPA), Internal Revenue Service (IRS), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) or Department of Commerce. Research and explain the purpose of the agency, bureau and how it directly impacts business. The requirements below must be met for your paper to be accepted and graded:Write between 750 – 1,250 words (approximately 3 – 5 pages) using Microsoft Word in APA style, see example below.Use font size 12 and 1” margins.Include cover page and reference page.At least 80% of your paper must be original content/writing.No more than 20% of your content/information may come from references.Use at least three references from outside the course material, one reference must be from EBSCOhost. Text book, lectures, and other materials in the course may be used, but are not counted toward the three reference requirement.Cite all reference material (data, dates, graphs, quotes, paraphrased words, values, etc.) in the paper and list on a reference page in APA style.References must come from sources such as, scholarly journals found in EBSCOhost, CNN, online newspapers such as, The Wall Street Journal, government websites, etc. Sources such as, Wikis, Yahoo Answers, eHow, blogs, etc. are not acceptable for academic writing.