Shareholders' expectation on the annual return rate on its equity in the Business:
K_E = \frac{\rm Return}{\rm E} |
where
| annual cash return , whether as dividends or as capital growth | |
The most popular model of estimating the Cost of Equity is Capital Asset Pricing Model (CAPM):
Business / Business Administration / Financial Management / Financial Accounting
[ Capital Asset Pricing Model (CAPM) ]