1. Crystal Glasses recently paid a dividend of $2.70 per share, is currently expected to grow at a constant rate of 5% and has a required return of 11%. Crystal Glasses has been approached to buy a new company. Crystal estimates if it buys the company, its constant growth rate would increase to 6.50%, but the firm would also be riskier, therefore increasing the required return of the company to 12%. Should Crystal go ahead with the purchase of the new company?

1. Yes, because the value of Crystal Co. will increase by $4.09 per share.
2. No, because the value of Crystal Co. will decrease by $4.09 per share.
3. Yes, because the value of Crystal Co. will increase by $5.03 per share.
4. No, because the value of Crystal Co. will decrease by $5.03 per share.