Financial Managment

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Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2010 Hi Experts,
In Cost of equity formuale(D1/Po+G) wat is D1/G and G kindly confirm my doubts

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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17 November 2010 As per Gordon’s theory, the cost of equity, ke = (D1/P0) + g. In this equation, D1 = dividend at T1, P0 = market value of the share at T0 and g = growth rate in decimals. We can have variations of this equation and find out any of the four parameters, given the other parameters. The variations are:
To determine growth rate, g = ke – (D1/P0),
To determine P0 = D1/(ke – g) and
To determine D1 = P0 x (ke – g)

Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2010 ok sir sir one another doubt is
1.When we find out Ke in a paticular year,whether it is same for all years?if no then wat il be for the next year
2.In D1(Already we are considering growth rate for present the year then why are taking g(growth) again seperately?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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17 November 2010 http://www.managementparadise.com/forums/archive/index.php/t-183477.html

Please check out above link.

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