UniGeniusExam CB1

Exam CB1

CB1 practice questions

Original written questions sorted by syllabus area, each with hints, a worked solution and a marking schedule.

PaperOne online written paper, answers typed in Word
Time3 hours 20 minutes, including reading time

Past papers

Past papers and examiners' reports moved to the members' learning site on 15 October 2025. The questions here are original and add to them rather than copy them.

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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.

YearDividend per share (pence)
20X115
20X216
20X317.2
20X418.6
20X520
  1. (i)
    Calculate the average annual rate of growth in dividends from 20X1 to 20X5, as a percentage to two decimal places.
    2 marks
  2. (ii)
    Calculate Melrose's cost of equity using the dividend growth model, as a percentage to two decimal places.
    2 marks
  3. (iii)
    Explain the limitations of using the dividend growth model to estimate Melrose's cost of equity.
    4 marks

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Take the free diagnosticThe weighted average cost of capital

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Questions people ask

Do the questions use real companies or tax rates?

No. Every company, figure and tax rate is invented and stated in the question, so every answer can be checked.