how do you calculate the cost of equity 
there are two primary ways to calculate the cost of equity the dividend capitalization model takes dividends per share dps for the next year divided by the current market value cmv of the stock and adds this number to the growth rate of dividends grd where cost of equity dps cmv grd conversely the capital asset pricing model capm evaluates if an investment is fairly valued given its risk and time value of money in relation to its anticipated return under this model cost of equity risk free rate of return beta market rate of return risk free rate of return 