The company needs to rise $3,200,000 for research and development and is considering the following financing option:

Suspend dividends for 2 years, and pay dividends of 25 cents per share from the 3rd year

Increasing dividends annually by 4% per years in subsequent years

Dividend in recent years have grown by 3% per year.

Recent Financial information:

Operating Profit:3,450,000

Interest: 200,000

Profit before taxation:3,250,000

Taxation:650,000

Profit after taxation:2,600,000

Dividends:1,600,000

Ordinary Shares (Nominal Value : 50 cents): 5,000,000

The profit tax rate paid by the company is 20% per year.

Company has cost of equity of 9% per year, which is expected to remain constant.

Under this financial sheet, which adoption of the financing option, and advise whether it will be acceptable to shareholders