GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which one of the following is not used to estimate cost of equity capital?
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External yield criterion
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Capital asset pricing model
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Dividend plus growth rate
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Equity capitalisation approach
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Explanation:
Detailed explanation-1: -Which of the following method is not used for Calculation of Cost of Equity? Price-Earnings Ratio.
Detailed explanation-2: -Three methods are used to estimate the cost of equity. These are the capital asset pricing model, the dividend discount model, and the bond yield plus risk premium method.
Detailed explanation-3: -The cost of equity can be calculated by using the CAPM (Capital Asset Pricing Model) or Dividend Capitalization Model (for companies that pay out dividends).
Detailed explanation-4: -There are three methods commonly used to calculate cost of equity: the capital asset pricing model ( CAPM ), the dividend discount mode ( DDM ) and bond yield plus risk premium approach.
There is 1 question to complete.