consolidated pasta is currently expected to pay annual didvends of 10 a share in perpetuity on the 2.3 million shares that are outstanding. shareholders require a 10% rate of return from consolidated stock

What is the price of consolidated stock?

What is the total market value of its equity?

Consolidated now decides to increase next year's dividend to 20 a share, without changing its investment or borrowing plans. Thereafter the company will revert to its policy of distributing 10 million a year.

How much new equity capital will the company need to raise to finance the extra dividend payment?

What will be total present value of Dividends paid each year on the new shares that the company will need to issue?

What will be the transfer of value from old shareholders to the new shareholders?