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Question content area top Part 1 Cooperton Mining just announced it will cut its dividend from $4.11 to $2.32 per share and use the extra
Question content area top
Part 1
Cooperton Mining just announced it will cut its dividend from
$4.11
to
$2.32
per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a
3.5%
rate, and its share price was
$50.79.
With the planned expansion, Cooperton's dividends are expected to grow at a
4.8%
rate. What share price would you expect after the announcement? (Assume that the new expansion does not change Cooperton's risk.) Is the expansion a good investment?
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