JRN Enterprises just announced that it plans to cut its next-year dividend,

D1,

from

$2.25

to

$1.30

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

$25.00

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.

$14.44

B.

$37.50

C.

$25.00

D.

$21.67