A-E

P7-2 (similar to) Management action and stock value REH Corporation's most recent dividend was 51.35 per share its expected annual rate of dividend growth is 5% and the required retum is now 15%. A variety of proposath are being considered by management to redirect the firm's activities. Determine the impact on share price for each of the following 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 rate to 7% and lower the required return to 13% c. Eliminate an unprofitable product line, which will increase the dividend growth rate to 9% and raise the required return to 17% d. Morge with another fim, which will reduce the growth rate to 4% and raise the required return to 16% e. Acquire a subsidiary operation from another manufacturer. The acquisition should increase the dividend growth rate to 9% and increase the required return to 17% a. If the firm does nothing that will leave the key financial variables unchanged the value of the firm will be $(Round to the nearest cent) st