r = rate of return required by the shareholders

Remember that, for this formula, the discount rate is the rate of return required by the investor.

The future expected cash flow from each building was estimated and discounted with a required rate of return.

· Second, the dividend growth rate (g) cannot exceed the investor's required rate of return (k).

Second, the dividend growth rate (g) cannot exceed the investor's required rate of return (k).

The second step is to estimate the required return for projects of this risk level.

A company may have several classes of shares, in which case each will have its own required rate of return.

The cost equity, often referred to as the required rate of return on equity, is most commonly estimated using CAPM.

The rate of return required is based on the level of risk associated with the investment, which is measured as the historical volatility of returns.

Under the Gordon Growth Model, a stock becomes more valuable when its dividend increases, the investor's required rate of return decreases, or the expected dividend growth rate increases.

Under the Gordon model, a stock is considered by definition more valuable when its dividend increases, the investor’s rate of return decreases or when there is an increase in the expected dividend growth rate.

First, it may be that the rate of return demanded by the financial community reaches such a high level that it is impossible for any macroeconomic equilibrium to sustain it.

Although the required rate of return on stocks and bonds returned to more “normal” levels by the end of the decade, capital costs remained high.