Cost of equity

(redirected from Cost-of-Equity)

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 ?
Diamond and group finance director, Chris Lucas, are to forego 50 percent of their deferred bonuses, which are paid out over three years, until the bank's return-on-equity exceeds its cost-of-equity.
The next three rows report the cost-of-equity estimates for each of our three models.
Given the variability in the cost-of-equity estimates in Table 1, it is not surprising that the three methods for calculating WACC also yield substantial differences.