JRN Enterprises Just Announced That It Plans to Cut Its

question 50

Multiple Choice

JRN Enterprises just announced that it plans to cut its dividend from $3.00 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 indefinitely at 4% per year and JRN's stock was trading at $25.50 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) $19.32
• B) $12.75
• C) $38.63
• D) $25.50

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Definitions:

Antisocial Personality Disorder

A mental condition in which a person consistently shows no regard for right and wrong and ignores the rights and feelings of others.

Correctional Service Of Canada

A federal agency responsible for the incarceration and rehabilitation of convicted criminal offenders in Canada.

Psychopathy

A personality disorder characterized by persistent antisocial behavior, impaired empathy, and bold, disinhibited, and egotistical traits.

Diagnostic Criteria

A set of symptoms and signs used by healthcare professionals to accurately identify and classify diseases or psychological conditions.