A company sells its ordinary share for Rs 25. The expected dividend at the year-end is Rs 2.50. Growth rate in dividend is 7%. Its bonds earn 12% interest. The company’s beta is 1.5. The risk-free...

A company sells its ordinary share for Rs 25. The expected dividend at the year-end is Rs 2.50. Growth rate in dividend is 7%. Its bonds earn 12% interest. The company’s beta is 1.5. The risk-free rate is 9%. The average return on the market is 13%. Find out the cost of ordinary share taking into account:

(a) the growth factor;

(b) CAPM; and

(c) the bond yield.