The two main formulas for determining the cost of equity are the capital asset pricing model (CAPM) and dividend discount model (DDM). Each formula serves a different purpose, with CAPM being the ...

The capital asset pricing model (CAPM) helps investors understand ... The WACC equation uses the expected value calculated from the CAPM as the cost of equity. The company value is divided by ...

One common formula used to calculate the cost of equity is the capital asset pricing model (CAPM). The CAPM formula is: Cost of Equity = Risk-Free Rate + (Beta * Market Risk Premium) Several ...