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Tags

#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #taxes-and-cc

Question

For estimating the cost of common equity, we discuss two. The first method uses the [...], and the second method uses the **[...]**

Answer

capital asset pricing model

dividend discount model (based on discounted cash flows)

dividend discount model (based on discounted cash flows)

Tags

#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #taxes-and-cc

Question

For estimating the cost of common equity, we discuss two. The first method uses the [...], and the second method uses the **[...]**

Answer

?

Tags

#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #taxes-and-cc

Question

For estimating the cost of common equity, we discuss two. The first method uses the [...], and the second method uses the **[...]**

Answer

capital asset pricing model

dividend discount model (based on discounted cash flows)

dividend discount model (based on discounted cash flows)

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There are several methods available for estimating the cost of common equity, and we discuss two in this reading. The first method uses the capital asset pricing model, and the second method uses the dividend discount model, which is based on discounted cash flows. No matter the method, there is no need to make any adjustment in the cost of equity for

#### Original toplevel document

**2.1. Taxes and the Cost of Capital**

l on the borrowing. Equity entails no such obligation. Estimating the cost of conventional preferred equity is rather straightforward because the dividend is generally stated and fixed, but estimating the cost of common equity is challenging. <span>There are several methods available for estimating the cost of common equity, and we discuss two in this reading. The first method uses the capital asset pricing model, and the second method uses the dividend discount model, which is based on discounted cash flows. No matter the method, there is no need to make any adjustment in the cost of equity for taxes because the payments to owners, whether in the form of dividends or the return on capital, are not tax-deductible for the company. <span><body><html>

There are several methods available for estimating the cost of common equity, and we discuss two in this reading. The first method uses the capital asset pricing model, and the second method uses the dividend discount model, which is based on discounted cash flows. No matter the method, there is no need to make any adjustment in the cost of equity for

l on the borrowing. Equity entails no such obligation. Estimating the cost of conventional preferred equity is rather straightforward because the dividend is generally stated and fixed, but estimating the cost of common equity is challenging. <span>There are several methods available for estimating the cost of common equity, and we discuss two in this reading. The first method uses the capital asset pricing model, and the second method uses the dividend discount model, which is based on discounted cash flows. No matter the method, there is no need to make any adjustment in the cost of equity for taxes because the payments to owners, whether in the form of dividends or the return on capital, are not tax-deductible for the company. <span><body><html>

status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
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repetition number in this series | 0 | memorised on | scheduled repetition | ||||

scheduled repetition interval | last repetition or drill |

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