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2 5 . Fastgrower inc. just announced that it plans to half its dividend from $ 4 to $ 2 per share and use the

25. Fastgrower inc. just announced that it plans to half its dividend from $4 to $2 per share and use the extra funds to expand its operations. Prior to this announcement, Fastgrower's dividends were expected to grow at 4% per year and Fastgrower's stock was trading at $25.00 per share. With the new expansion, Fastgrower's dividends are expected to grow at 8% per year indefinitely. Assuming that Fastgrower's risk is unchanged by the expansion, the value of a share of Fastgrower after the announcement is closest to:
A) $25.00 B) $16.50 C) $31.25 D) $27.50

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