The CB1 exam format

One online paper of 3 hours 20 minutes, including reading time, with your answers typed in Word.

Paper	One online written paper, answers typed in Word
Time	3 hours 20 minutes, including reading time
Study time	About 150 hours recommended

What the paper asks

Written questions of varying marks: explanations, discussions and calculations such as a weighted average cost of capital, a net present value or a set of ratios.
About 30% of marks test knowledge, 50% application to a scenario and 20% higher-order skills such as drawing conclusions and making recommendations.
Questions can come from any part of the syllabus, so prepare across all of it.

Try a question

Cost of equity from dividend growth

Cost of capital · Straightforward · 8 marks

Melrose Kitchens plc has paid the dividends per share shown in the table. The 20X5 dividend has just been paid, and the share price is now £3.20 ex dividend. The directors expect dividends to keep growing at the same average annual rate as over the last four years.

Year	Dividend per share (pence)
20X1	15
20X2	16
20X3	17.2
20X4	18.6
20X5	20

(i)
Calculate the average annual rate of growth in dividends from 20X1 to 20X5, as a percentage to two decimal places.
2 marks
Your answer
(ii)
Calculate Melrose's cost of equity using the dividend growth model, as a percentage to two decimal places.
2 marks
Your answer
(iii)
Explain the limitations of using the dividend growth model to estimate Melrose's cost of equity.
4 marks

Next step

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Questions people ask

Is there a spreadsheet paper?

No. CB1 is a single written paper typed in Word. Calculations are set out in your typed answer.

How long should I study for CB1?

The recommended study time is about 150 hours.