Question 1 (a) The ordinary shares of Kingsbarns plc are expected to yield a dividend of 0.50 per annum forever. Kingsbarns's cost of equity is 5%. What is the value of a share in Kingsbarns? (5 Marks) (6) Analysts have forecasted that next year's dividend per share for Bacall plc will be 150 cent. They also forecast that the short-run growth rate in dividends will be 5% per annum until the end of year 4. From year 5 dividends are anticipated to grow at 2% per annum indefinitely. The cost of capital of Bacall is 6%. What is the value of a share in Bacall? (15 Marks) (c) Davina borrows 10,000 from her bank at 5% per annum over 4 years to purchase a new car. She is required to repay this amount in equal annual instalments on the anniversary of the drawdown of the loan. Draw up the repayment schedule for Davina's loan. (15 Marks) (d) Bush plc has just announced earnings of 50 million. Its pay- out ratio is 20%. Bush has 25 million shares in issue and its PE ratio is 4. The growth in dividends is projected at 3% indefinitely. What is the cost of equity capital of Bush? (15 Marks)