Question
JRN Enterprises just announced that it plans to cut its next-year dividend,D1,from $2.75 to $1.10 per share and use the extra funds to expand its
JRN Enterprises just announced that it plans to cut its next-year dividend,D1,from $2.75 to $1.10 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 5% per year and JRN's stock was trading at $25.00
per share. With the new expansion, JRN's dividends are expected to grow at 10% 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:
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
9781266566899
