Investment research analysts classified Bovine Industries as a cash cow because it pays out all its earnings as dividends. Recently, however, Bovine researchers developed an advanced purification process that would attract a new segment of health-conscious consumers, generating sales growth while allowing the firm to earn a 10% return on retained earnings in future years, that is, it will generate a 10% return on its whole business going forward (not just the reinvested earnings). The new technology, however, will require continuing investment. To pay this ongoing obligation, Bovines Board is evaluating a proposal to reduce its dividend payout ratio immediately from 100% to 35% (in other words, increasing its earnings retention rate from 0% to 65%). Current (t=0) earnings and dividends are $1,500,000. Investors are expectingand currently earninga return of 12% overall return.

In light of this, what is the Bovine NPVGO? (Hint: Find the value of Bovine as it is today, without the new investment and growth; and then calculate its changed value with the lower dividend payout / higher growth trajectory.)

A. 975,000

B. 4,375,000

C. -3,898,077

D. -2,334,091

E. 2,150,557