Dividend yield plus growth in dividend process, Financial Management

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Q. Dividend Yield plus Growth in Dividend process?

Dividend Yield plus Growth in Dividend process: - This process is used to compute the cost of equity capital when the dividends of a firm are likely to grow at a constant rate.

K_e = DPS/ MP X 100 + G

K_e = Cost of Equity Capital

DPS = Dividend Per Share

MP = Market Price Per Share

G = Rate of growth in Dividend

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