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Dubai Metro’s stock price was at $100 per share when it announced that it will cut its dividends for next year from $10 per share to $6 per share, with additional funds for the expansion of the Metro. Before the dividend cut, Dubai Metro expected it dividends to grow at a constant rate of 4%, but with the expansion, dividends are now expected to grow at a constant rate of 7%. Assume that the required rate of return remains the same after the change.

What would be the Metro’s stock price after the change?

Financial Management, Finance

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