JRN Enterprises Just Announced That It Plans to Cut Its

question 51

Multiple Choice

JRN Enterprises just announced that it plans to cut its dividend from $2.50 to $1.50 per share and use the extra funds to expand its operations.Prior to this announcement,JRN's dividends were expected to grow at 4% per year and JRN's stock was trading at $25.00 per share.With the new expansion,JRN's dividends are expected to grow at 8% per year indefinitely.Assuming that JRN's risk is unchanged by the expansion,the value of a share of JRN after the announcement is closest to:

• A)$25.00.
• B)$15.00.
• C)$31.25.
• D)$27.50.

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Definitions:

exFAT

A file system type that improves upon FAT32 by having a theoretical maximum file size of 16 EB, maximum volume size of 64 ZB (but 512 TB is the current limit), smaller cluster sizes than FAT32, and an increased number of files allowed in a directory. Created for external storage media such as flash drives and hard drives for saving images/video.

FAT32

A file system that supports hard drives up to 2 TB in size.

SATA

Serial ATA, an interface used to connect ATA hard drives to a computer's motherboard, offering improvements over the older Parallel ATA (PATA) standard, including faster data transfer rates.

PATA

Parallel ATA, an earlier standard for connecting storage devices like hard drives and optical drives to a computer's motherboard.