b) Wangui analyzes the Kucha equity market. She notes that Kucha companies are currently experiencing annual growth of 12% in earnings and dividends. She expects the growth rate to decline linearly to 4% per year over a period of fifteen years, and then continue at 4% per year. She gathers additional equity market information shown below: Kucha Equity Market Information Market Characteristic Value Equity index level 1144 Forecast index earnings per share (next 12 months) KMD 81 Current index dividend per share (current year) KMD 46 Risk-free rate 6.7% Equity discount rate 10.2% Equities at market value (KMD billions) 224 Debt at market value (KMD billions) 116 Calculate the fair value of the Kucha equity market using the H-model and the information above (6 marks) b) Wangui analyzes the Kucha equity market. She notes that Kucha companies are currently experiencing annual growth of 12% in earnings and dividends. She expects the growth rate to decline linearly to 4% per year over a period of fifteen years, and then continue at 4% per year. She gathers additional equity market information shown below: Kucha Equity Market Information Market Characteristic Value Equity index level 1144 Forecast index earnings per share (next 12 months) KMD 81 Current index dividend per share (current year) KMD 46 Risk-free rate 6.7% Equity discount rate 10.2% Equities at market value (KMD billions) 224 Debt at market value (KMD billions) 116 Calculate the fair value of the Kucha equity market using the H-model and the information above (6 marks)