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Plz explain me the circumstances where the cost of equity would be used?…
How should I answer thisWhen appraising projects using the WACC, then the cost of equity is part of the calculation of the WACC.
When taking an adjusted present value approach, the base case NPV is arrived at by discounting at the all equity financed cost of equity.
When calculating the market value of a share, the expected future dividends are discounted at the shareholders required rate of return (which is the same as the cost of equity).
All of this is explained in my free lectures for Paper AFM.
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