banner image

Opt In (Do Not Edit Here)

banner image

Cost of Equity

Cost of Equity:

Cost of equity capital is the rate at which investors discount the expected dividends of the firm to determine its share value. Conceptually the cost of equity capital (Ke) defined as the “Minimum rate of return that a firm must earn on the equity financed portion of an investment project in order to leave unchanged the market price of the shares”.

[Post Image Courtesy of Stuart Miles at]

Cost of equity can be calculated from the following approach:

• Dividend price (D/P) approach

• Dividend price plus growth (D/P + g) approach

• Earning price (E/P) approach

• Realized yield approach.

Cost of Equity Cost of Equity Reviewed by Blog Editor on Wednesday, April 26, 2017 Rating: 5

No comments:

Do you have any reasonable comments for this post ? Please feel free to drop them below using the comment box. We will moderate and publish them as soon as possible. Cheers !

Powered by Blogger.