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JRN Enterprises just announced that it plans to cut its next-year dividend, Dy, from $2.00 to $1.00 per share and use the extra funds to
JRN Enterprises just announced that it plans to cut its next-year dividend, Dy, from $2.00 to $1.00 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 4% per year and JRN's stock was trading at $24.50 per share. With the new expansion, JRN's dividends are expected to grow at 8% 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. $12.25 B. $24.50 C. $24.02 D. $48.04
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