First, we need to find the required return prior to the announcement;
r = [D1 / P0] + g
= [$3.77 / $51.26] + 0.031 = 0.0735 + 0.031 = 0.1045, or 10.45%
This required return will remain same after the announcement.
Price after announcement = D1 / [r - g]
= $2.68 / [0.1045 - 0.047] = $2.68 / 0.0575 = $46.57
ork 594 ou Cooperton Mining just announced it will cut its dividend from $3.77 to $2.68...
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