Answer to Question #276125 in Financial Math for Anup

Question

In terms of practicality of use, compare the three ways of estimating cost of equity discussed in class.

Answer 1

As a result, the cost of equity will be the rate of return expected by its owners. The cost of equity is calculated using three approaches. The capital asset pricing model, the dividend discount model, and the bond yield plus risk premium technique are all examples of these methods.