Answer:
21.42
Explanation:
rE= Div1 / P0+ g
= 3.00/ 25.50 + .04
= 0.15% or 15%
Solve for new stock price:
P0= Div1 / (rE- g)
= 1.50/ (0.15- .08)
=1.50/0.07
= 21.42
Therefore assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to: 21.42
<span>Market supply would decrease because costs of production would be higher</span>
