Answer:
(a) 14.84
(b) (i) 10.78%
(ii) 9.97%
Explanation:
D1 = D0 × (1 + Growing rate)
  = 1.6 × 1.2
  = 1.92
D2 = D1 × (1 + Growing rate)
   = 1.92 × 1.2
   = 2.304
P2 = [D2 × (1 - gn)] ÷ (rs + gn)
  = (2.304 × 0.94) ÷ (10%+6%)
   = 13.536
Current price:
[tex]=\frac{1.92}{1.1} + \frac{2.304}{(1.1)^{2}}+\frac{13.536}{(1.1)^{2}}[/tex]
   = 14.84
Expected dividend yield = D0 ÷ Current price
                     = 1.6 ÷ 14.84
                     = 10.78%
P1 = [D2 ÷ (1+rs)] + [P2 ÷ (1+rs)]
  = 2.304/1.1 + 13.536/1.1
  = 14.4
Capital gains yield = P1 -  Current price + (D1 ÷ Current price)
                = 14.4 - 14.84 + (1.92 ÷ 14.84)
                = 9.97%
