Cost of Equity: Formulas, Calculation, Advantages, and ...
To calculate the Cost of Equity of ABC Co., the dividend of last year must be extrapolated for the next year using the growth rate, as, under this method, calculations are based on future dividends. The dividend expected for next year will be 55 (50 x (1 + 10%)). The Cost of Equity for ABC Co. can be calculated to % ( (55 / 450) + 10%).