Page 25 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx
P. 25
Cost of capital
2.2 Dividend valuation model (DVM) – expected constant
dividends (no growth)
d
K e =
P o
kₑ = cost of equity
d = constant dividend
Pₒ = ex div market price of a share (ex div = AFTER dividend paid)
In exam questions prices could be quoted ex div or cum div. Read
the question properly!
17
