Xport International Just Announced That It Plans to Cut Its

Multiple Choice

Xport International just announced that it plans to cut its dividend from $1.75 to $1.00 per share and use the extra funds to expand its operations.Prior to this announcement,Xport's dividends were expected to grow at 5% per year and Xport's stock was trading at $35.00 per share.With the new expansion,Xport's dividends are expected to grow at 7% per year indefinitely.Assuming that Xport's risk is unchanged by the expansion,the value of a share of Xport after the announcement is closest to:

A) $30.00
B) $33.33
C) $35.00
D) $37.50
E) $50.00