5. Dren Industries is considering expanding into a new product line. Earnings per share are expected to be $5 in the coming year and are expected to grow annually at 5% without the new product line but growth would increase to 7% if the new product line is introduced. To finance the expansion, Dren would need to cut its dividend payout ratio from 80% to 50%. If Dren's equity cost of capital is 11%, what would be the impact on Dren's stock price if they introduce the new product line? Assume the equity cost of capital will remain unchanged. 6. At the end of 2019, Newerks Inc. forecasts that its free cash flow will be $50 million in 2020, $60 million in 2021, and $72 million in 2022. After 2022, Newerks expects its free cash flow earnings to grow at an annual rate of 6%. Newerks has $75 million in debt and $25 million in cash. If Newerks has 5 million shares outstanding and a cost of capital of 14%, what is Newerks stock price at the end of 2019? 7. List 3 advantages and disadvantages of taking a company public 8. Explain four reasons why companies would want to merge