Assume that Kish Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D 0 = $0.90; P 0 = $27.50; and g = 7.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? 9.29% 9.68% 10.08% 10.50% 10.92%

10.50%

Explanation:

According to the given situation, the solution of cost of equity from retained earning is shown below:-

Cost of equity = (D0 × (1 + g) ÷ P0) + g

Now we will put the values into the above formula.

= (0.90 × (1 + 0.07) ÷ 27.50) + 0.07

= 10.50%

Therefore for determining the cost of equity from retained earning we simply applied the above formula.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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