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Cost of Equity Calculator
Estimate a company’s cost of equity using the Capital Asset Pricing Model (CAPM), based on risk-free rate, beta, and expected market return.
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What is cost of equity?
Cost of equity is the return a company is theoretically required to pay its equity investors to compensate for the risk of holding its stock. The Capital Asset Pricing Model (CAPM) is the most widely used method to estimate it.
The formula
Cost of Equity = Risk-Free Rate + Beta × (Expected Market Return – Risk-Free Rate). Beta measures a stock’s volatility relative to the overall market: a beta above 1 means more volatile than the market, and below 1 means less volatile.
This calculator is for general financial education and analysis purposes, not investment advice.
Last reviewed August 2026