You are analysing the performance of a UK based company. You are given the following information relating to the companys financial statements: - Net profit: 500 million - Number of ordinary shares: 80 million You are also provided with the following relevant information to help analyse the company: - Quoted share price: 2 - P/E ratio (forward): 15 - Variance of returns on London Stock Exchange: 0.5 - The covariance of the companys stock returns with the returns of London Stock Exchange: 0.98 - Annual rate of return on UK risk-free treasury stock: 4.0% - Anticipated annual return on entire UK stock market: 6.0% Required:

(a) Calculate the expected earnings growth rate of the company using the information above

(b) Calculate Companys cost of equity