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Part 1

Cooperton Mining just announced it will cut its dividend from

$3.93

to

$2.69

per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a

3.1%

rate, and its share price was

$48.72.

With the planned expansion, Cooperton's dividends are expected to grow at a

4.6%

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?