Which of the following factors in the discounted cash flow (DCF) approach to estimating the cost of common equity is the least difficult to estimate?
A)Expected growth rate, g
B)Dividend yield, $\frac { \tilde { \mathrm { D } } _ { 1 } } { \mathrm { P } _ { 0 } }$
C)Required return, rs
D)Expected rate of return, $\hat { r } _ { s }$
E)All of the above are equally difficult to estimate.

Question

Quizplus · Accepted Answer

The dividend yield, $\frac { \tilde { \mathrm { D } } _ { 1 } } { \mathrm { P } _ { 0 } }$, is the least difficult to estimate because it is based on the current dividend and stock price, which are readily available and observable.

Which of the Following Factors in the Discounted Cash Flow D~1P0\frac { \tilde { \mathrm { D } } _ { 1 } } { \mathrm { P } _ { 0 } }P0​D~1​​

Which of the Following Factors in the Discounted Cash Flow $\frac { \tilde { \mathrm { D } } _ { 1 } } { \mathrm { P } _ { 0 } }$