HDTV Has Planned on Diversifying into the VR Field

Multiple Choice

HDTV has planned on diversifying into the VR field. As a result, HDTV's beta would rise to 1.6 from 1.2 and the expected future long-term growth rate in the firm's earnings would increase from 12% to 16%. The expected market return, k_m, is 14%; the risk-free rate, r_f, is 7%; and the current dividend, D_o, is $0.50. Should HDTV go into the VR field?

A) No, stock price decreases $7.82.
B) Yes, stock price increases $9.89.
C) Yes, stock price increases $3.81.
D) No, stock price decreases $3.78.