Cost of Equity Calculator

Calculate the required return on equity using CAPM, Build-up Method, and Dividend Discount Model (DDM).

CAPM Inputs

Risk-Free Rate (%) - 10-Year Treasury

Beta (Market Risk)

Beta = 1 is market average. > 1 is more volatile, < 1 is less volatile.

Expected Market Return (%)

Size Premium (%)

Company-Specific Risk (%)

Annual Dividend Per Share ($)

Current Stock Price ($)

Expected Dividend Growth Rate (%)

11.20%

Required return for equity investors

CAPM Method11.20%

Build-up Method10.00%

Risk-Free Rate4.00%

Equity Risk Premium6.00%

Beta x ERP (Systematic Risk)7.20%

Total Risk Premium7.20%

Ke = Rf + β × (Rm - Rf) + Size + Specific

= 4.0% + 1.2 × 6.0% + extras

= 11.20%