Cost of Equity

Cost of equity, abbreviated as COE, is the rate of return a company expects on their equity inestments to compensation for the risk profile of the asset.

 

cost of equity Formula

\(\large{ COE =  \frac{ DPS }{ CMV } + GRD   }\)

Symbol

\(\large{ COE }\) = cost of equity

\(\large{ CMV }\) = current market value of stock

\(\large{ DPS }\) = dividends per share, for next year

\(\large{ GRD }\) = growth rate of dividend