There is no dividend yeild in the formula.. but still in the example that follow they have added tge dividend yeild to find out the expected equity returns?? Why? How??
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Expected equity return has two components: dividend yield and capital appreciation. The formula mentioned in the section is for market value of equity, V and thus the growth rate of this figure accounts for only the capital appreciation of equity. You are correct in noting that the formula does not have a dividend yield component. In fact, the last paragraph states that the above formula and the argument that follows DOES NOT SUPPLY a way to estimate dividend yield. So, the paragraph mentions how to calculate dividend yield using dividend payout ratio and profit multiple.