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Effect on company risk

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You have decided to add an expansion to your company, but to obtain the money to do so you must reduce your dividend from $2.50 to $1.50 per share. Before this decision dividends were expected to grow at 4% per year andyour stock was trading at $25.00 per share. After you expand, your dividends are expected to grow at 8% per year indefinitely. Assuming this expansion has no effect on your company's risk, the new value of your shares will be closest to:

Reference no: EM133003816

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