Dear John
I used the ungeared beta 0.952 calculated ungeared cost of equity 4%+0.952(10%-4%)=9.712%, then use MM proposition 2 formula calculate geared cost of equity 9.712%+0.8(9.712%-8%)(3496/17325)=9.99% however it is different from the answer. Could you please let me know where I did wrong.
Ask the Tutor ACCA AFM
Eview S/D 2017 cost of equity
7y ago#1In your workings you have taken (9.712% - 8%), but you should have taken (9.712% - 4%)
Sign in to reply to this topic.