Cost of Equity Ratios Flashcards
Ratios needed to calculate WACC
1
Q
Accounting Rate of Return Ratio
A
Average profit/ average investment
2
Q
Capital asset Pricing Model
A
Risk free rate of return +
Beta factor X ( Return required by market- Risk Free Rate of Return)
3
Q
Dividend Growth Model
A
(Dividend per Share X(1+ Growth Rate)/ Market price per Share )) + growth rate
