Cost of Equity

Definition: Cost of Equity is the minimum annual Rate of Return a company has to offer to its ordinary shareholders for waiting for their returns and for bearing risk. The risk consists of both the market risk and the company-specific risk.
Therefore the COE varies from one company to another.
COE can be calculated by dividing the dividends per share for next year by the current market value of the Stock, and then adding the growth rate of the dividends.
COE is part of a firm's cost of capital, as are cost of debt and cost of prefered stock.

Learn more about Cost of Equity

More on investing: Alternative Investments, Asset Management, Break-even Point, BRIC Countries, Capital Structure, more...

You may also like: Full-time MBA, Executive MBA, Executive Education, Online MBA.

MBA Brief offers concise, yet precise definitions of concepts, methods and models as taught in a study Master of Business Administration.

We like to keep things short, and provide links to learn more about your subject.

Add MBA Brief to your desktop / iPad