Barnes Limited’s most recent dividend was €2.20 per share, its expected annual rate of dividend growth is 5%, and the required return is 12%. Its management is considering a variety of proposals to redirect the firm’s activities. Determine the impact on the share price for each of the following proposed actions, and indicate the best alternative.

a. Do nothing, which will leave the key financial variables unchanged.

b. Acquire a subsidiary operation from another manufacturer in Thailand. The acquisition should increase the dividend growth rate to 8% and increase the required return to 15%.

c. Eliminate an unprofitable product line, which will increase the dividend growth rate to 7% and raise the required return to 14%.

d. Invest in a new technology that will increase the dividend growth rate to 8% and lower the required return to 10%.

e. Merge with another firm, which will decrease the dividend growth rate to 4% and decrease the required return to 8%.