The traditional formula for the cost of equity is the dividend capitalization model and the capital asset pricing model (CAPM). The cost of equity is the return that a company requires for an ...

The two main formulas for determining the cost of equity are the capital asset pricing model (CAPM) and dividend discount model (DDM). Each formula serves a different purpose, with CAPM being the ...

The CAPM formula describes the expected return for ... The WACC equation uses the expected value calculated from the CAPM as the cost of equity. The company value is divided by the number of ...

One common formula used to calculate the cost of equity is the capital asset pricing model (CAPM). The CAPM formula is: Cost of Equity = Risk-Free Rate + (Beta * Market Risk Premium) Several ...

Mullins, David W., Jr. "Diversification, the Capital Asset Pricing Model, and the Cost of Equity Capital." Harvard Business School Background Note 276-183, March 1976. (Revised November 1993.) ...

Mullins, David W., Jr. "Financial Leverage, the Capital Asset Pricing Model and the Cost of Equity Capital." Harvard Business School Background Note 280-100, March 1980. (Revised October 1980.) ...

Learn more about the weighted average cost of capital and see why firms unlever and re-lever beta to compare debt and equity ...