The new share price will be

$enter your response here.

(Round to the nearest cent.)

Part 3

Is the expansion a positive NPV investment?(Select from the drop-down menu.)

In this case, cutting the dividend to expand

is

is not

a positive NPV investment.

Cooperton Mining just announced it will cut its dividend from $5.08 to $3.28 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 2.8% rate, and its share price was $48.29. With the new expansion, Cooperton's dividends are expected to grow at a 4.9% rate. What share price would you expect after the announcement? (Assume Cooperton's risk is unchanged by the new expansion.) Is the expansion a positive NPV investment