Sachin Ltd wishes to calculate its cost of equity and provides the following information.

$$ Beta of $1\mathrm{.}2$

$$ Market price of each share: R$28,00$

$$ Last declared dividend: $120$c

$$ Market return: $8\mathrm{.}75\%$

$$ Expected growth rate: $5\%$

$$ Long$-$term return on government bonds: $5\%$

REQUIRED:

Marks

Sub$-$total Total

Calculate for Sachin Ltd$,$ its cost of equity using

a$)$ Dividend growth model

b$)$ Capital asset pricing model

$($NB: Please state the formulae for each calculation. Marks

will be awarded for stating the formulae$)$

$6$

$4$

$10$

TOTAL $10$