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JRN Enterprises just announced that it plans to cut its next-year dividend, D1, from $2.50 to $1.50 per share and use the extra funds to
JRN Enterprises just announced that it plans to cut its next-year dividend, D1, from $2.50 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 at 3% 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 6% 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: A. $22.05 B. $15.30 C. $36.74 D. $25.50
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