CAPM cost of equity calculator
Risk-free plus beta times the premium.
Interactive: CAPM cost of equityMedium
- Cost of equity
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- Premium over risk-free
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- Implied no-growth multiple
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- Compounded over 5 years
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- Reading
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The "implied no-growth multiple" is 1 ÷ cost of equity — the P/E a company deserves if it never grows and pays everything out. It is the cleanest demonstration of why valuations fall when rates rise: nothing about the business changed, only the denominator.
The idea behind it
This calculator belongs to Valuation & Cost of Capital, where the mechanism it computes is explained step by step, with the formula, what each input means and where the simple model stops being right. Everything is computed in your browser; nothing you type is sent anywhere.
Instruments it applies to
- Common Stock — A fractional ownership stake in a company — with voting rights, dividend claims and unlimited upside.
More calculators from Valuation & Cost of Capital
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- Discounted cash flow with a terminal value — and how much of the answer that one assumption is.
- Reverse DCF — what growth does this price require? — what growth the current price already assumes.
- Where a bond's value actually sits — coupons against principal, off a zero curve.