Cost of Equity Calculator

  • Table of Contents

A Cost of Equity Calculator helps estimate the return required by equity investors. This can be calculated using models like the Capital Asset Pricing Model (CAPM).

The Cost of Equity (\( R_e \)) is calculated using the CAPM formula:

\[ R_e = R_f + \beta (R_m - R_f) \]


  • \( R_e \) = Cost of Equity
  • \( R_f \) = Risk-Free Rate
  • \( \beta \) = Beta
  • \( R_m \) = Market Return

Using the Calculator

  1. Enter the following values into the respective input fields:

    • Risk-Free Rate: 2
    • Beta: 1.5
    • Market Return: 8
  2. Click the "Calculate Cost of Equity" button.

  3. The calculator will display the result:

    • Cost of Equity: 11.00%

This calculator helps businesses and investors estimate the return required by equity investors based on the risk-free rate, beta, and market return using the CAPM model. Adjusting the input values allows users to simulate different scenarios and understand the impact on the cost of equity.