Question $2(13$ marks$)$

Ms$.$ Jane Tong is planning her early retirement. Currently, Jane has $$10,000,000$ in savings and plans to invest all the money into CBIC Corporation's shares.

CBIC has just paid an annual dividend of $$20$ per share. It is expected that the company's dividend will grow by $10\%$ per year for the next two years before settling at a constant $5\%$ per year indefinitely. CBIC has a beta of $1\mathrm{.}5.$

Given the risk$-$free interest rate is $4\%$ and the market risk premium is $5\%.$

$($a$)$ Compute the required return on CBIC shares using CAPM.

$(3$ marks$)$

$($b$)$ What are the expected dividends $(D_1,D_2$ and $D_3)$ for the following three years?

$(3$ marks$)$

$($c$)$ Given the required return in part $($a$),$ calculate the intrinsic value of one CBIC share.

$(5$ marks$)$

$($d$)$ How many shares of CBIC shares can Jane purchase today?

$(2$ marks$)$