Lumi Industries has RM6 million in excess cash and 1.2 million shares outstanding. Lumi is...
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Lumi Industries has RM6 million in excess cash and 1.2 million shares outstanding. Lumi is considering investing the cash in one-year Treasury bills that are currently paying 6% interest and then using the cash to pay a dividend next year. Alternatively, Lumi can pay the cash out as a dividend immediately and the shareholders can invest in the Treasury bills themselves. Assume that capital markets are perfect. If Lumi invests the excess cash in Treasury bills, then what the dividend per share next year will be?
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