Management Action and Stock Value Assignment

Management action and stock value REH Corporation’s most recent dividend w $2.66 per shares expected annual rate of dividend growth is 5%, and the required remisow being considered by management to redirect the firm’s activities. Determine the impact on share price for each of the following proposed cons Avany of

G Do nothing which will leave the key financial variables unchanged

b lnvest in a new machine that will increase the dividend growth rate to 8% and lower the required return to 12%

m invest an unpredictable product line which will increase the dividend growth rate to 8% and is the required return to 17%

d. Merge with another form, which wil reduce the growth rate to 3% and raise the required return to 10% Acquire a subsidiary operation from another manufacturer. The acquisition should increase the dividend growth ratelo 8% and increase the required return to 17%

a. If the fim does nothing that will leave the key financial variables unchanged the value of the firm will be found to the nearest cont.)

b. If the firm invests in a new machine that will increase the dividend growth rate to 8% and lower the required return to 12%, the value of the form will be found to the nearest cont.)

C. If the firm eliminates an unprofitable product line that will increase the dividend growth to 8% and raise the required return to 17%. The value of the firm will be s o und to the nearest cant)

d. If the firm merges with another form that wil reduce the growth rate to 3% and raise the required return to 16%, the value of the firm wil b o und to the nearest cont)

e. If the firm acquires a subsidiary operation from another manufacturer that will increase the dividend growth rate to 8% and increase the required return to 17%, the value of the firm will be nearest cent.) Get Finance homework help today

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