Cost of Equity Capital (Dividend Capitalization Model)
- Re = [D/P] + g
- D = Dividend of firm
- P = Price of firm’s shares
- g = growth rate of dividend
This is just P = d/(r-g) rewritten. Sometimes you just have the dividend yield and need the cost of equity for say WACC.
I removed the multiply by 100% I think that was just because I didn’t like using percentages as decimals for a while or need to do the *100 in Excel and got used to doing it.