1. For the following stable growth firm, calculate:

Cost of equity using CAPM, with a risk free rate of 1.2%, a market risk premium 6%, and an equity beta 1.7.

(1 mark)

2. Current growth rate with the required rate of return on equity of 16% and retention ratio of 50%.

(1 mark)

3. Estimate the current share price with a current year EPS equal to $2.0

(2 marks)