Evaluate earning yield plus growth in earning method, Financial Management

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Q. Evaluate Earning Yield plus Growth in Earning Method?

Earning Yield plus Growth in Earning Method: - If the EPS of a company is likely to grow at a constant rate of growth the cost of equity capital can be calculated as follows:

K_e = EPS/MP X 100 + G

K_e = Cost of Equity Capital

EPS = Earning Per Share

MP = Market Price Per Share

G = Rate of growth in EPS

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