Using the dividend growth model, BMC Inc., an all equity firm has estimated its cost of

equity to be $10\mathrm{.}5\%.$ Their stock is currently selling on the market for $$38\mathrm{.}00$ per share. An

annual dividend of $$0\mathrm{.}70$ was received today by shareholders. A project has been estimated

to have an internal rate of return $($IRR$)$ of $9\%.$ Which of the following are true.

a$)$ In estimating the cost of equity, the VP of Finance must have assumed a constant

level of growth for the forthcoming dividends.

b$)$ The estimate of the rate of growth of dividends is $8\mathrm{.}5\%.$

c$)$ The WACC of BMC Inc. must be $10\mathrm{.}5\%.$

d$)$ The project should be accepted.

e$)($a$),($b$)$ and $($c$)$ are true.