Cost of Equity Using the DCF Approach




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Cost of Equity Using the DCF Approach

What is the cost of equity if the D1 =$1.00, Po $25, divident payout ratio is 30% and ROE is 20%?
 
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harkaran atwal
Student (MBA), India
 

Re:

D1=$1
Payout ratio=30%
So, E. P. S.=$1/.3= $3.33
Cost of equity= E. P. S./ po= 3.33/25 = 13.33%
Hope this answers your querry.

   

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