Describe the dividend yield method, Financial Management

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Q. Describe the Dividend Yield Method?

Dividend Yield Method: - This process is based on the assumption that when an investor invests in the equity shares of a company he expects to get a payment at least equal to the rate of return prevailing in the market. The equation is:

K_e = DPS/ MP X 100

Ke = Cost of Equity Capital

DPS = Dividend Per Share

MP = Market Price Per Share

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