In DDM reading 30, EOC number 44.
They used the required rate of return of 8.3% as the return on equity.
That would only be the case if the company was 100% equity right? So you have to assume the company has no debt because it is not given in the problem.
Am I missing something?
Well if our required return is our expected return, then we would expect a minimum 8.3% return on equity. As to capital structure differences, if the company takes on more debt, then it increases its financing expenses which can reduce its net income (it could also increase its net income if its cost of debt is say 7%, and it uses that borrowed money to generate 9%), and so that gets reflected in the ROE calculation.
Accordingly, although ROE is usually required in the calculation, given you don’t have that information explicitly, you should use the best approximation, which in this case is required return.
Hope that helps.