Select options: "Rises" or "declines"

Problem 11-09 The dividend-growth model, D(1 +9) V= k-9 suggests that an increase in the dividend growth rate will increase the value of a stock. However, an increase in the growth may require an increase in retained earnings and a reduction in the current dividend. Thus, management may be faced with a dilemma: current dividends versus future growth. As of now, investors' required return is 8 percent. The current dividend is $1 a share and is expected to grow annually by 6 percent, so the current market price of the stock is $53. Management may make an investment that will increase the firm's growth rate to 7 percent, but the investment will require an increase in retained earnings, so the firm's dividend must be cut to $0.7 a share. Should management make the investment and reduce the dividend? Round your answer to the nearest cent. The value of the stock -Select- to $ so the management -Select- v make the investment and decrease the dividend