Consolidated Pasta is currently expected to pay annual dividends of $$10$ a share in perpetuity on the $2\mathrm{.}4$ million shares that are outstanding. Shareholders require a $8\%$ rate of return from Consolidated stock.

A$.$ What is the price of Consolidated stock?

B$.$ What is the total market value of its equity?

C$.$ 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?

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

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

F$.$ Is this figure more than, less than, or the same as the extra dividend that the old shareholders will receive?