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Q. Evaluate Earning Yield plus Growth in Earning Method?

Earning Yield plus Growth in Earning Method: - If the EPS of a company is likely to grow at a constant rate of growth the cost of equity capital can be calculated as follows:

Ke =  EPS/MP X 100 + G

Ke = Cost of Equity Capital

EPS = Earning Per Share

MP = Market Price Per Share

G = Rate of growth in EPS

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M9575422

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