Cooperton Mining just announced it will cut its dividend from $4.27 to $2.67 per share and use
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Cooperton Mining just announced it will cut its dividend from $4.27 to $2.67 per share and use the extra funds to expand. Prior to the announcement, Cooperton’s dividends were expected to grow at a 2.9% rate, and its share price was $49.06. With the new expansion, Cooperton’s dividends are expected to grow at a 4.8% rate. What share price would you expect after the announcement?
(Assume Cooperton’s risk is unchanged by the new expansion.) Is the expansion a positive NPV investment?
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Related Book For
Corporate Finance The Core
ISBN: 9781292431611
5th Global Edition
Authors: Jonathan Berk, Peter DeMarzo
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