This cost of equity calculator requires the following information: Next year’s dividends per share, current mark value of the stock, and growth rate of dividends. Enter this information into the form below to calculate the cost of equity.

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## Cost of Equity Formula

The following formula can be used to calculate cost of equity.

COE = (FDPS / CMV) + GRD

- Where COE is the cost of equity
- FDPS is next year’s dividends per share
- CMV is the current market value of the stock
- GRD is the growth rate of the dividends

## Cost of Equity Definition

A cost of equity is defined as the net cost of equity or the ratio of the growth of dividends to the current stock price.

## How to calculate cost of equity?

How to calculate cost of equity

**First, determine the current stock value**Look up the current stock value of the security you are analyzing.

**Next, estimate next year’s dividends per share**Based on the current stock price and % dividends, calculate next year’s dividends per share.

**Determine the growth rate of the dividend.**Calculate the growth rate of the dividends using next year’s value and the past year’s value.

**Calculate the cost of equity**Enter the information from steps 1-3 into the equation to calculate the cost of equity.

## FAQ

**What is the cost of equity?**

The cost of equity is a financial term used to describe the growth rate of dividends with respect to the current stock price. In other words the net cost of the stock at the current moment.