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koban [17]
4 years ago
10

JRN Enterprises just announced that it plans to cut its dividend from $3.00 to $1.50 per share and use the extra funds to expand

its operations. Prior to this announcement, JRN's dividends were expected to grow indefinitely at 4% per year and JRN's stock was trading at $25.50 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to ________. (Hint: solve for the cost of equity using the original information. This will still be the cost of equity after the change in dividends)
Business
1 answer:
choli [55]4 years ago
4 0

Answer:

$19.32

Explanation:

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