Used to calculate the Residual Values for the Dividend Discounting Valuation Method in Strategic Finance. Using cost of equity to calculate residual value for the Dividend Discount Approach allows you to assign different required rates of return to the post-planning horizon period and forecast period. This feature increases your flexibility in modeling the forecast period and residual value of the company.
Forecasting different costs of equity for different periods is not recommended unless you expect the company to 1.) operate in businesses with substantially different risk in the future, or 2.) go through a period when its capital structure is suboptimal.
Enter the input as a percentage.