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WACC: Components and Calculations by Saeed Ahmed (Father Name:Jamal Ud Din) is a document available to read on EtoBox.

a) Using the discounted cash flow approach: - Current dividend (D1) = $2.14 - Stock price (P0) = $23 - Expected growth rate (g) = 7% Cost of equity = D1/P0 + g = $2.14/$23 + 0.07 = 0.093 + 0.07 = 0.163 = 16.3% b) Using the CAPM approach: Cost of equity = Rf + β(Rm - Rf) = 9% + 1.6(13% - 9%) = 9% + 1.6(4%) = 9% + 6.4% = 15

Author

Saeed Ahmed (Father Name:Jamal Ud Din)

Language

EN