Management action and stock value REH Carporation's most recent dinidend was $1.78 per share, its expected anntal rale of dhidend growth is 5%, and the required reLirn is now 15%. A variety of proposals are being considered by managemont to redrect the firm's activities. Determine the impact on share price for each of the folowing proposed actions. a. Do nothing, which will leave the key financial variables unchanged. b. Invest in a new machine that will increase the dividend growth ease to 7% and lower the required return to 11%. c. Eliminate an unprofitable product line, which will increase the dividend grosth rate to 9% and raise the required retum to 16%. d. Merge with enother firm, which wil roduce the growth rote to 2% and raise the reguired retum to 16%. e. Acquire a subsidiayy aperation from another manufacturer. The aoquisition should increase the dividend growth rale to 9% and increase the required return to 16% a. If the firm does nothing that wil leave the key tinancial variables unchanged, the value of the firm will be : (Round to the nearest cent.) b. If the firm invests in a now machine that will increase the dividend growe rate to 7% and lower the required return to 11%, the value of the firm will be 4 (Roend to the nearest cent.) c. If the firm eliminatos an unprafitable product line that wit increase the dividend growth rate to 9% and rase the required retum to 16%, the value of the firm wil be: (Round to the naarest cent.) d. If the firm merges with another firm that will reduce the growh role 62% and ralso the required retum to 16%, the value or the fimm wil be : (Round to the nearest cent) e. If the firm accuires a subsid lary operation from another manufacturer that will increase the dividend growh rate to 9% and increase the required retum to 16%, the value of the firm wil te $ (Round to the nearest cent.).

1. Management action and stock value REH Carporation's most recent dinidend was $1.78 per
share, its expected anntal rale of dhidend growth is 5%, and the required reLirn is now 15%. A
variety of proposals are being considered by managemont to redrect the firm's activities.
Determine the impact on share price for each of the folowing proposed actions. a. Do nothing,
which will leave the key financial variables unchanged. b. Invest in a new machine that will
increase the dividend growth ease to 7% and lower the required return to 11%. c. Eliminate an
unprofitable product line, which will increase the dividend grosth rate to 9% and raise the required
retum to 16%. d. Merge with enother firm, which wil roduce the growth rote to 2% and raise the
reguired retum to 16%. e. Acquire a subsidiayy aperation from another manufacturer. The
aoquisition should increase the dividend growth rale to 9% and increase the required return to
16% a. If the firm does nothing that wil leave the key tinancial variables unchanged, the value of
the firm will be : (Round to the nearest cent.) b. If the firm invests in a now machine that will
increase the dividend growe rate to 7% and lower the required return to 11%, the value of the firm
will be 4 (Roend to the nearest cent.) c. If the firm eliminatos an unprafitable product line that wit
increase the dividend growth rate to 9% and rase the required retum to 16%, the value of the firm
wil be: (Round to the naarest cent.) d. If the firm merges with another firm that will reduce the
growh role 62% and ralso the required retum to 16%, the value or the fimm wil be : (Round to the
nearest cent) e. If the firm accuires a subsid lary operation from another manufacturer that will
increase the dividend growh rate to 9% and increase the required retum to 16%, the value of the
firm wil te $ (Round to the nearest cent.)