The cost of equity capital is the rate of return investors expect to receive from investing in
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The cost of equity capital is the rate of return investors expect to receive from investing in the firm’s stock. There are two primary methods for determining the cost of equity. One approach is to use the Dividend Growth Model to determine the required rate of return on the firm’s equity. A second approach is to use the Capital Asset Pricing Model (CAPM) to determine the expected or required rate of return for a firm’s stock. Explain which you would use and why?
Related Book For
Financial Theory and Corporate Policy
ISBN: 978-0321127211
4th edition
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
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