Illustrate earning yield method, Financial Management

Q. Illustrate Earning Yield Method?

Earning Yield Method: - As per this method, cost of equity capital is calculated by establishing a relationship between earning per share and the current market price of the share. The equation is:

K_e = EPS / MP X 100

K_e = Cost of Equity Capital

EPS = Earning Per Share

MP = Market Price Per Share

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