what is the weighted average cost of equity 
a company s weighted average cost of equity measures the cost of equity proportionally across the types of equity instead of taking the simple average cost across all types of equity i e common shares preferred shares etc the weighted average cost of equity proportionally considers the equity value of each type of equity to calculate the weighted average cost of equity multiple by the cost of any given specific equity type by the percentage of capital structure it represents the bottom linea company s cost of equity is an important consideration as companies determine the best way to raise capital calculated as the dividends issued per share divided by the current market price plus a growth rate or by using the capm the cost of equity is the expense a company should assume it must return back to investors based on prevailing costs the cost of equity is often compared to the cost of debt when making capital structure decisions 