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Cost of Equity Capital (Dividend Capitalization Model)

July 19, 2012
  • 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.


From → Asset Valuation

  1. 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.

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