Cost of Equity Calculator
Parameter | Description | Example Value |
---|---|---|
Risk-Free Rate | The return on risk-free investments (e.g., government bonds). | 2% |
Beta | The volatility measure of a stock compared to the market. | 1.2 |
Market Risk Premium | The additional return expected from holding a risky market portfolio instead of risk-free assets. | 5% |
Cost of Equity | The return required by equity investors (Risk-Free Rate + Beta * Market Risk Premium). | 8% |