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

b.Invest in a new machine that will increase the dividend growth rate to

88%

and lower the required return to

1414%.

c.Eliminate an unprofitable product line, which will increase the dividend growth rate to

66%

and raise the required return to

19 %19%.

d.Merge with another firm, which will reduce the growth rate to

44%

and raise the required return to

1818%.

e. Acquire a subsidiary operation from another manufacturer. The acquisition should increase the dividend growth rate to

9 %9%

and increase the required return to

1919%.

Management action and stock valueREH Corporation's most recent dividend was $ 2.79 $2.79 per share, its expected annual rate of dividend growth is 5 5%, and the required return is now 15 15%. A variety of proposals are being considered by management to redirect the firm's activities. Determine the impact on share price for each of the following proposed actions.