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?

Question

Quizplus · Accepted Answer

Dividend yield is the current dividend payout divided by the current stock price, which is easily observable in the market. In contrast, expected growth rate (g) and required return (rS) are based on projection and estimation, making them more difficult to estimate accurately. The expected rate of return (kS) is a function of the other factors, so it is also subject to estimation errors. Therefore, B is the least difficult factor to estimate.

Which of the Following Factors in the Discounted Cash Flow