Cost of Equity

The Cost of Equity is what investors in the equity in a business expect to make on their investment

Using Capital Asset Pricing Model - 

where, E(Ri) = expected rate of return of the security

Rf = Risk-free rate

B = Beta of the security

E(Rm) = Expected return of the market

E(Rm) - Rf = Expected Risk Premium

• Beta
• Risk-free Rate
• Expected Risk Premium