Cost of equity


Also found in: Acronyms, Wikipedia.

Cost of equity

The required rate of return for an investment of 100% equity.

Cost of Equity

The required rate of return that a stockholder demands from a publicly-traded company in exchange for buying a share and assuming the risk associated with it. It is calculated thusly:

Cost of Equity = ( Dividends per share / Price per share ) + Dividend growth rate.
References in periodicals archive ?
FLOS use numerous measures of information risk as well as numerous methodologies to show that information risk is priced into the cost of equity capital.
The interest rate for calculating the opportunity cost of equity is based on the respective year's December average LIBOR (London Inter-Bank Offered Rate) for U.
Providing the practical results about studying the effect of information asymmetry on cost of equity capital and cost of debts on the actual and potential investors and creditors and also managers and helping these groups in making correct and reasonable financial decisions.
This finding contributes to the international business and financial literature by identifying national culture as an important institutional variable influencing firms' cost of equity capital around the world.
We provide two interrelated predictions that may account for the impact of the investment horizon of institutional investors on the cost of equity.
To calculate the present value of this company, it will take the weighted average cost of capital if the calculation refers to the EV and the cost of equity if the calculation relates to equity.
He said that the bank would seek a return on equity above its cost of equity and reveal the margin in 2013.
Russian political risk on the rise; warrants a higher cost of equity.
This is possible partly because Nashua's AAA bond rating means it can borrow money more cheaply than the cost of equity capital used by private Pennichuck Corp.
Hesselbach, using input from an investment-banking firm, has estimated the company's cost of equity to be 14%.