Company A' stocks trade on the New York Stock Exchange. The following information applies: Macro-economic data Company data Treasury-Bill rate 3% Equity beta 1.3 Market return 6% a) Using the information provided, calculate the cost of equity capital for Company A. [2] b) John is risk averse. He does not want to hold a portfolio with beta exceeding 0.5. What proportions of his wealth should he invest in T-bills and in the stock of Company A, if he also wishes to maximise his expected return? What rate of return can he expect? [4%] Suppose now you are a junior equity analyst. You produce the following forecasts for Company A's dividends (in cent) per share for the period 2021-2025: Year 2021 2022 2023 2024 2025 Forecasted Dividend 6.64 7.56 7.63 8.23 8.52 c) Deduce Company A's share price in 2020, assuming that after 2025 the dividend per share remains equal to 8.90 cents in perpetuity. [2%] d) Deduce Company A's share price, assuming that after 2025 the dividend per share will grow at a constant rate of 3% in perpetuity. By how much the share price changes with respect to Part c)? [2%]