JRN Enterprises just announced that it plans to cut its dividend for the next year from £3.00 to £1.50 per share
and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow indefinitely at 4% per year and JRN's stock was trading at £25.50 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assume that JRN's risk is unchanged by the expansion. (a) What is JRN's cost of equity capital?