Logging Ltd has paid a dividend every year over the past ten years. The company maintainec a very healthy profit margin In the past and is expecting substantial grovhh in the future This is due to the weakening local currency and the fact that it; exports much of its products, has European subsidiary from which it can remit profits and is experiencing robust local grovhh. All of the company's new projects are financed through equity. The company has a beta o 2.00 and a credit rating of B from Moodey's due to a default on a bond before 2007 Below is a graph, from an online provider, showing the earnings per share (EPS) and divid per share (DPS) over the past ten years. Logging LTD EPS and DPS 2007 - 2017 2008 2009 2010 2011 2012 2013 . EPS .ops 2014 2015 2016 2017 A group of investors have banded together to ask that the company adopt a dividend polio, with a stable payout ratio of 50%. They indicated that the reason IS that the dividend paid ou annually did not grow at the same rate as the business (assume that the growth rate of EPS and the company's market value is the same). Assume a risk free rate of 6% and a market risk premium of 6%. Required: The board has tasked you with drafting a brief report evaluating the situation and advising the shareholders as to why the firm does not maintain such a high payout ratio, and how It is ir their interest that they do not do so in the future. One of the directors tells you, on record, that in 2008, they used equity to purchase theil European subsidiary, which has shown massive growth, as an example of why they do want to pay out more dividends. Note: Your report should be based on calculations and an application of dividend theory anc should not exceed 1.5 pages.