# Cost of Equity

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Cost of equity, abbreviated as COE, is the rate of return a company expects on their equity inestments to compensation for the risk profile of the asset.

## cost of equity Formula

 $$\large{ COE = \frac{ DPS }{ CMV } + GRD }$$

### Where:

$$\large{ COE }$$ = cost of equity

$$\large{ CMV }$$ = current market value of stock

$$\large{ DPS }$$ = dividends per share, for next year

$$\large{ GRD }$$ = growth rate of dividend