Brosnan plc generates cash flows of £5 million p.a. after allowing for tax and depreciation, which is used for reinvestment. It has issued 10 million shares. Shareholders require a 12 per cent return.

Required Value each share:

(i) assuming all cash flows are distributed as dividend.

(ii) assuming 50 per cent of cash flows are retained, with a return on retained earnings of 15 per cent.

(iii) as for (ii), but assuming 10 per cent return on reinvestment.

(iv) assuming that cash flows grow at 7.5 per cent for each of the first three future years, then at 5 per cent thereafter.

Note: assume all cash flows are perpetuities.