Blue Bottling, Inc. (BBI), is a bottling company and is considering expanding into filling 16-ounce bottles. In order to do so, BBI must purchase a...

Common Stock: BBI common stock is currently trading for $50 per share and there are 100,000 shares issued and outstanding. There are two methods for computing the cost of capital, and you should average the two values for your final cost of common stock. The firm will pay annual dividends of $3.00 per share in the coming year. The firm's dividends and earnings have been growing at an annual rate of 3.5%, and this is expected to continue in the future. Lang's beta is currently 0.8 and the current 90-day t-bill rate is 2.5%, while the historic market average is 10%.