The traditional formula for the cost of equity ... Under this model, Cost of Equity = Risk-Free Rate of Return + Beta × (Market Rate of Return – Risk-Free Rate of Return).

Beta is critical to WACC calculations, where it helps 'weight' the cost of equity by accounting for risk. WACC is calculated as: WACC = (weight of equity) x (cost of equity) + (weight of debt ...

The CAPM formula is: Cost of Equity (CAPM) = Risk-Free Rate of Return + Beta × (Market Rate of Return – Risk-Free Rate of Return) For example, if the risk-free rate is 2%, the market return is ...

The CAPM formula is: Cost of Equity = Risk-Free Rate + (Beta * Market Risk Premium) Several factors influence the cost of equity. These include the company’s financial performance, market ...