ALM Ltd currently operates three projects. Each project is expected to generate a cash inflow every year forever. Assume the ALM is fully equity financed. The cash inflows of each project are given below:

$$ Project Alpha: $$4$ million per year

$$ Project Beta: $$5$ million per year

$$ Project Gamma: $$6$ million per year

$$ ALM Ltd has a cost of capital of $10\%$ and $100$ million shares issued. There are no taxes.

$($c$)$ ALM would like to increase the dividend by $$0\mathrm{.}40.$ It is considering issuing new shares to finance existing projects. This will free up capital to pay the higher dividend. If the cost of issuing new shares is $5\%,$ demonstrate what impact this would have on shareholders$$ wealth at the end of the year $($note: new shareholders are not entitled to the dividend$).($ans: $$1\mathrm{.}63)$

$($d$)$ ALM would like to increase the dividend by $$0\mathrm{.}40$ and is considering liquidating one of its projects at the end of the year to finance the higher dividend. The company is able to sell projects for only $66\mathrm{.}67\%$ of their value. Demonstrate what impact this would have on shareholders$$ wealth at the end of the year. $($ans: $$1\mathrm{.}45)$

$($e$)$ What impact would either of these attempts to increase the dividend have on shareholder wealth? Why?