The following information has been taken from the statement of financial position of Rose PLC, a listed company: Statement of Financial Position of Rose Plc as at 31/12/2020 'M 'M 50 Non-current assets Current assets Cash and cash equivalents Other current assets 4 4 16 20 Total assets 70 Equity and reserves Ordinary shares Reserves 15 29 44 6 Non-current liabilities 6% Preference shares 8% loan notes Bank loan 8 5 19 Current liabilities 7 Total equity and liabilities 70 Further Information on Rose plc The ordinary shares of Rose plc has a nominal value of 1 per share and a current ex- dividend market price of 6.10 per share. A dividend of 0.90 per share has just been paid. The dividends are expected to grow at 5% over the next three years. The 6% preference shares of Rose plc have a nominal value of 0-75 per share and an ex-dividend market price of 0.64 per share. The 8% loan notes of Rose plc have a nominal value of 100 per loan note and a market pric of 103.50 per loan note. Annual interest has just been paid and the loan notes are redeemable in five years' time at pa to nominal value. The bank loan has a variable interest rate. a Rose ple pays corporation tax at a rate of 20%. Investment in facilities Rose ple's board is looking to finance investments in facilities over the next three years, forecast to cost up to 27m. The board does not wish to obtain further long-term debt finance and is also unwilling to make an equity issue. This means that investments have to be financed from cash which can be made available internally by using the profits. Board members have made a number of suggestions about how this can be done: Director A (Andrew) has suggested that the company does not have a problem with funding new investments, as it has cash available in the reserves of 29m. If extra cash is required soon, Rose plc could reduce its investment in working capital and use the money they have put aside for the day-to-day activities of the business. Director B (Brian) has suggested borrowing 10m or raising 10m in shares and also use 17m of their cash to pay the investment and pay 2m in a dividend. Director C (Colin) has commented that although a high dividend has just been paid, dividends could be reduced over the next three years, allowing spare cash for investment. Colin would prefer not to eliminate all the cash of the business as this is needed for day-to- day activities and his concern is it will cause liquidity issues. He is concerned not paying a dividend might have an impact on the market value of the shares once announced. (e) Consider the scenario where Rose plc announce that they are not paying a dividend in 2021. The current share price is 6.10. Analyse what might happen to this share price as a result of this news, citing the theory that backs up your opinion. Provide researched analysis on a company that you are familiar with to back up your claims. (f) From a company you are familiar with discuss the impact their dividend policy has on their share price. Include: background to the company, the initial share price. (g) Based on the information above discuss the impact of one external economic factor the directors need to consider before proceeding with the investment and deciding on a dividend policy