Continued... O Cost of internal equity capital k。=D/Po+8 Cost of R/E using constant dividend g k。=r+B0m-r分 CAPM Risk premium on debt approach Add Cost of external equity ke=DilPnet+g Pnet=Po(1-) 剥外经价贫多方居 YO年N0事0E0003Continued Continued… zCost of internal equity capital – ke = D1/P0 + g Cost of R/E using constant dividend g – ke = rf + βj(rm – rf) CAPM – Risk premium on debt approach Add % zCost of external equity k′e = D1/Pnet + g Pnet = P0(1 – f)