Question: 1) Bourbon County Mining (BCM) just announced it will cut its dividend from $4.80 to $3.75 per share and use the extra funds to expand.

1) Bourbon County Mining (BCM) just announced it will cut its dividend from $4.80 to $3.75 per share and use the extra funds to expand. Prior to the announcement, BCMs dividends were expected to grow at a 4 percent rate, and its share price was $60. With the new expansion, BCMs dividends are expected to grow at a 6 percent rate. What share price would you expect after the announcement? (Assume BCMs risk is unchanged by the new expansion.) Is the expansion a positive NPV investment?

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