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Cost of Equity Capital
Cost of Equity Capital
Image 1 Basically the return that stockholders require for a company. The traditional formula is the dividend capitalization model:

Cost of Equity =
Dividends per Share
(for next year)
 + Growth Rate
of Dividends
Current Market Value of Stock

Image 2 The Capital Asset Pricing model (CAPM) is another approach to determining Cost of Equity.



CAPM

Cost of Capital

Equity