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:

Unit Variable Cost

Unit Variable Cost is the cost associated with producing one additional unit of a product, including materials and labor, which varies with the volume of production.

Data Table Function

A feature in software that allows users to organize and analyze data in table format, often with sorting, filtering, and computational capabilities.

Percentage Of Risk

The proportionate part of a total risk that can be attributed to a specific factor or action, often expressed as a percentage.

Forecast Chart

A graphical representation used in statistics and business to predict future outcomes based on past and present data.