difference between formulas ?

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May 3, 2015 at 10:23 pm #243904
bezanija
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there is a formula for calculating cost of equity and it goes Ke=(d0(1+g)/p0)+g
and there is a formula that you can find on the formula table given at the exam and it goes
P0=d0(1+g)/ri-g There was a question in December 2010 no.4 where they used this formula to calculate the value of the equity ,I was tricked and I was trying to solve the question by the formula first above . Can u help me better understand the difference between two formulas?
May 4, 2015 at 6:34 am #243925
John Moffat
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There is no difference – it is the same formula re-arranged.
(I suggest that you watch the free lecture on calculating the cost of equity where I go through this point.)
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