Cooperton Mining just announced it will cut its dividend from $3.82to $2.45 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 3.2% rate, and its share price was $48.02. With the planned expansion, Cooperton's dividends are expected to grow at a 4.7% rate. 1. What share price would you expect after the announcement? (Assume that the new expansion does not change Cooperton's risk.) 2. Is the expansion a good investment?

Cooperton Mining just announced it will cut its dividend from $3.82to $2.45 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 3.2% rate, and its share price was $48.02. With the planned expansion, Cooperton's dividends are expected to grow at a 4.7% rate. 1. What share price would you expect after the announcement? (Assume that the new expansion does not change Cooperton's risk.) 2. Is the expansion a good investment?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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