Two weeks ago in an interview question "You have a company with a P/E ratio of 10x and cost of debt of 5%, what is the cost of equity? And would this company finance with debt or equity?" How would you get the cost of equity using the P/E ratio?
Trending Content - Investment Banking Forum
| +320 | UBS Tech MD hires Son (from no-name college) as an Intern | 54 | 6h |
| +89 | [Official] 2026 IB Analyst Bonus Megathread (with 2025 Consolidated Pay and Perks/Benefits) | 12 | 1d |
| +53 | Is DCM actually underrated ? | 20 | 3h |
| +46 | Are all Tech / TMT groups sweaty? | 31 | 12h |
| +46 | Evercore Intern Seizure | 6 | 12m |
| +41 | UBS Groups Ranked by Future Outlook | 20 | 5d |
| +41 | JPM M&A is Gone??? Purely Coverage Banking??? | 20 | 11h |
| +37 | Am I behind? 31 Year Old Analyst | 10 | 15h |
| +32 | UVA McIntire vs Cornell Dyson for IB | 19 | 3d |
| +32 | Losing my personality in Banking | 5 | 1d |
Career Resources
inverse of pe ratio is cost of equity / equity yield so in this case its 10%
I guess since equity is more expensive, you'd prefer to finance with debt?
Error iusto aut labore qui nihil dolorem. Laudantium sequi iure assumenda sint et quaerat. Vel molestias sunt quo. Quia aliquam officiis nostrum sint. Consequatur consequatur provident debitis et et tenetur.
Autem laborum reprehenderit provident corrupti eligendi velit. Libero earum necessitatibus eos libero. Optio ut non aut cumque. Est adipisci velit et impedit quibusdam.
Rerum voluptates qui corporis recusandae deleniti et aut et. Provident distinctio voluptatem recusandae architecto consequatur omnis est.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...