BBK Industries plans to sell 2 million shares of its common stock for $80 per share, with an annual dividend of $1.90 per share. Determine the lower cost of equity capital under the following conditions: (a) The company expects a dividend growth rate of 3% per year, and (b) a 5% discount is offered to attract stock purchases and a much lower dividend growth rate of 1% per year is anticipated.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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BBK Industries plans to sell 2 million shares of its
common stock for $80 per share, with an annual
dividend of $1.90 per share. Determine the lower
cost of equity capital under the following conditions:
(a) The company expects a dividend growth
rate
of 3% per year, and (b) a 5% discount is offered
to attract stock purchases and a much lower
dividend growth rate of 1% per year is anticipated.

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