Cost of equity

(Ke).

The rate of return on a company’s net investments financed by equity, which is required to service the providers of the company’s equity capital.

For example 10%.

The cost of equity is often quantified in practice by using either: (1) the Capital asset pricing model, or (2) the Dividend growth model.

See also

• Capital asset pricing model
• Cost of debt
• Dividend growth model
• Equity
• Weighted average cost of capital