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Cost of equity
Financial Management
In book , question 5, in calculating cost of equity," Po , Why should we take issue price instead of market price?"
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Thread Starter
Dhivyaa LathaBut why ? Being a going concern and not redeeming it , we give preference to Market price as Po. Then, why we issue price?
Being a new issue, entity's net proceeds will be issue price less flotation cost. So in case of new issue price is given, we give preference to issue price.
vishwam mandepudi
Whenever market price and issue price are different we will take issue price to calculate cost of equity.
But why ? Being a going concern and not redeeming it , we give preference to Market price as Po. Then, why we issue price?
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