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

Beta, represented by the Greek lowercase letter β, is also used in the formula for the weighted average cost of capital, which calculates a company’s cost of capital. This article, though ...

We can simply copy the formula in C10 to the right in D10. Then all we need to do is add in the beta for GM in cell D9. We find a beta of 1.30 which gives us an expected return of 10.10%.

The CAPM formula is: Cost of Equity (CAPM) = Risk-Free Rate of Return + Beta × (Market Rate of Return – Risk-Free Rate of Return) For example, if the risk-free rate is 2%, the market return is ...