Assessing the Impact of Suarez​ Manufacturing's Proposed Risky Investment on Its Stock

Assessing the Impact of Suarez​ Manufacturing's Proposed Risky Investment on Its Stock Value   Early in​ 2013, Inez​ Marcus, the chief financial officer for Suarez​ Manufacturing, was given the task of assessing the impact of a proposed risky investment on the​firm's stock value. To perform the necessary​ analysis, Inez gathered the following information on the​ firm's stock. During the immediate past 5 years​ (2008-2012), the annual dividends paid on the​ firm's common stock were as​ follows: Dividend per share 2012 $ 1.90 2011 1.70 2010 1.55 2009 1.40 2008 1.30 a. Find the current value per share of Suarez​ Manufacturing's common stock. The firm expects that without the proposed​ investment, the dividend in 2013 will be $ 2.09 per share and the historical annual rate of growth​(rounded to the nearest whole​ percent) will continue in the future.​ Currently, the required return on the common stock is 14.0 % . ​Inez's research indicates that if the proposed investment is​undertaken, the 2013 dividend will rise to $ 2.15 per share and the annual rate of dividend growth will increase to 13.0 % . She feels that in the best​ case, the dividend would continue to grow at this rate each year into the future and that in the worst​ case, the 13.0 % annual rate of growth in dividends would continue only through​ 2015, and​ then, at the beginning of​ 2016, would return to the rate that was experienced between 2008 and 2012. As a result of the increased risk associated with the proposed risky​investment, the required return on the common stock is expected to increase by 2.0 % to an annual rate of 16.0 % ​, regardless of which dividend growth outcome occurs. Armed with the preceding​information, Inez must now assess the impact of the proposed risky investment on the market value of​ Suarez's stock. To-Do A). Find the current value per share of Suarez​ Manufacturing's common stock.(B. Find the value of​ Suarez's common stock in the event that it undertakes the proposed risky investment and assuming that the dividend growth rate stays at 13.0 % forever. Compare this value to that found in part ​(a​). What effect would the proposed investment have on the​ firm's stockholders? Explain.C). On the basis of your findings in part ​(b​), do the stockholders win or lose as a result of undertaking the proposed risky​ investment? Should the firm do​ it? Why? D). Rework parts ​(a​) and ​(b​) assuming that at the beginning of 2016 the annual dividend growth rate returns to the rate experienced between 2008 and 2012. PLEASE ANSWER ALL PARTS TO THE QUESTIONS A THROUGH D