VE D. (1+9) 9 suggests that an increase in the dividend growth rate will increase the value of a stock. However, an increase in the growth may require an increase in retained eamings, and a reduction in the current dividend. Thus, management may be faced with a dilemma: current dividends ersus future growth. As of now, investors' required return is 13 percent. The current dividend is $1 a share and is expected to grow annually by 8 percent, so the current market price of the stock is $21.6. Management may make an investment that will the firm's growth rate to 11 percent, but the investment will require an increase in retained earnings, so the firm's dividend must be cut to $0.9 a share. Should management make the investment and reduce the dividend? Round your answer to the The value of the so the management Select- make the investment and decrease the dividend