Download Chapter 6 Review in Class PDF

TitleChapter 6 Review in Class
TagsNet Present Value Cost Of Capital Discounting Beta (Finance) Discounted Cash Flow
File Size502.3 KB
Total Pages32
Document Text Contents
Page 31

Chapter 6Chapter 6

page 186page 186

Appendix BAppendix B

Dividend Growth ModelDividend Growth Model

Equity Cost ofEquity Cost of

CCaappiittaall ==


YYiieelldd ++

Expected dividendExpected dividend

growth rategrowth rate

kkee = DIV = DIV11 ++ gg


kkee Equity Cost of CapitalEquity Cost of Capital

DIVDIV11 expected dividend in year 1expected dividend in year 1

PPoo current stock pricecurrent stock price

gg averaaverage expege expected acted annual divnnual dividend gidend growtrowth rh r

See page 187, Box 6.5 for comparisonSee page 187, Box 6.5 for comparison

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