I think i understand the other equity risk premium calculations but I saw this one… Eq Risk Premium = DIV1 growth + LT EPS growth - Rf I guess it makes sense, but does anyone want to form a logical story for me here so I can better remember this? Thanks dude.
Total returns to an invester in any forms = DIV + EPS = say InvestmentReturns why DIV = since they are paid out why EPS = since the excess surplus reinvested with hope of make it GROW Returns over the Risk Free Returns = [InvestmentReturns - RFR] = Equity Risk Premium