Free Cost of Equity Calculator
Use our free Cost of Equity calculator to estimate the cost of equity for any public company using the CAPM or Dividend Discount Model.
Choose a stock to calculate
Does the company pay a dividend?
Risk-free rate of return
Beta
Market rate of return
Calculate
What is the Cost of Equity Calculator?
The Cost of Equity Calculator helps you estimate the return required by investors to invest in a company's stock. It's based on widely accepted models like the Capital Asset Pricing Model (CAPM) and the Dividend Discount Model (DDM).
This metric is crucial for stock valuation, portfolio analysis, and investment decision-making.
How do I use the Cost of Equity Calculator?
Start by entering the company name or ticker.
Choose your calculation method - CAPM for most stocks, or DDM for dividend-paying companies.
The calculator will autofill common inputs, which you can adjust manually.
Click “Calculate” to instantly get your cost of equity result.
Why is calculating the cost of equity important?
Cost of equity is essential in evaluating whether a stock provides enough return for the risk it carries. It's also a key component in:
Discounted Cash Flow (DCF) models
Comparing companies
Assessing funding costs
Knowing a company's cost of equity helps you decide whether it's worth the investment.
Is the Cost of Equity Calculator free to use?
Yes, this calculator is completely free and available to anyone.
There's no sign-up required; just enter your inputs and calculate.
What formula does the calculator use?
You can choose from two standard formulas:
CAPM (Capital Asset Pricing Model):
Cost of Equity = Rf + β × (Rm - Rf)
Where:
Rf = Risk-free rate
β = Stock beta
Rm = Expected market return
Dividend Discount Model (Gordon Growth Model):
Cost of Equity = (D1 / P0) + g
Where:
D1 = Next year's expected dividend
P0 = Current share price
g = Expected dividend growth rate
Use CAPM if the company doesn't pay regular dividends or if you want a broader market-based view.
How accurate is the free Cost of Equity Calculator?
The calculator applies well-established financial models. Its accuracy depends on the quality of your input data.
For the best results, use up-to-date values from reliable sources like:
Yahoo Finance
Google Finance
Company investor relations pages
Where can I find the data I need?
Here's where to look for each input:
Beta: Found on most finance sites under the stock's summary page
Risk-free rate: Use current yield on 10-year U.S. Treasury bonds
Market return: Typically 8–10% (based on historical averages)
Dividend and share price data: Use Yahoo Finance, Google Finance, or company websites
Start calculating now
Use the calculator above to find the cost of equity for any stock. Whether you're valuing a business or analyzing your portfolio, this tool gives you a fast and reliable way to get started.
