Estimating cost of capital and the financial literacy impact on investment sector

Abstract

In this paper I chose 20 listed companies that pay dividends from first and second classification, 10 from each, and estimated their cost of capital from their financial report. By using Gordon’s Growth Model I got estimated their cost of equity, I chose to use different approach to estimate cost of debt. As expected the cost of equity is lower than cost of debt. I analyzed the result by comparing the cost of capital of two classification, current situation of stock market and banking sector dominance. Then I connected this to financial literacy to reduce banking sector’s influence.