Question: Cooperton Mining just announced it will cut its dividend from $4.32 to $2.22 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 2.9% rate, and its share price was $51.77. With the new expansion, Cooperton's dividends are expected to grow at a 4.9% rate. (Assume Cooperton's risk is unchanged by the new expansion.)
a) What share price would you expect after the announcement?
b) The equity cost of capital is %. (Round to two decimal places.)
c) Is the expansion a positive NPV investment?