Cost of equity capital, Financial Management

What is Cost of Equity Capital? Describe please.

Posted Date: 2/14/2013 12:31:46 AM | Location : United States





Definition of Cost of Equity Capital

In financial theory, the return that stockholders need for a company, the traditional formula for cost of equity that is abbreviated as COE is the dividend capitalization model:

Cost of Equity = (Dividends per share/ Current market value of stock) + growth rate of dividends

A firm''s cost of equity presents the compensation that the market demands in exchange for owning the asset and bearing the risk of ownership.

Posted by Robert | Posted Date: 2/14/2013 12:34:24 AM


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