Cost of Equity

Cost of equity is the return that equity investors require to compensate them for the risk of investing in a company's stock. It is a key component of WACC and therefore directly affects the discount rate used in DCF stock valuation.

공식

Cost of Equity (CAPM) = Rf + β × (Rm − Rf)

예시

If the risk-free rate is 4.5%, the market premium is 5.5%, and a stock's beta is 1.0, the cost of equity is 10.0%. This represents the minimum annual return an equity investor demands — a threshold directly embedded in stock valuation models.

왜 중요한가

Cost of equity is arguably the most important risk input in stock valuation. Because equity is riskier than debt, the cost of equity is always higher, making it the dominant driver of WACC for companies with equity-heavy capital structures.

MiniValuator 에서 Cost of Equity 사용법

MiniValuator does not calculate a cost of equity or blend it with a cost of debt into a WACC. Instead of building the discount rate up from these components, the tool applies a single discount rate that defaults to 10% and can be edited directly, and that rate drives the entire DCF. Cost of equity appears here as a core valuation concept, not as a MiniValuator input.

공식

예시

왜 중요한가

MiniValuator 에서 Cost of Equity 사용법

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