Cooperton mining just announced it will cut its dividend, Ask an Expert

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Cooperton Mining just announced it will cut its dividend from $4 to $2.50 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 3% rate, and its share price was $50. With the new expansion, Cooperton's dividends are expected to grow at a 5% rate. What share price would you expect after the announcement? (Assume Cooperton's risk is unchanged by the new expansion, so the cost of equity remains unchanged.) Is the expansion a positive NPV investment?

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Financial Management, Finance

Category:- Financial Management
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