Cost of Equity (CAPM) Calculator

About this calculator

The Capital Asset Pricing Model (CAPM) estimates the return investors require for holding a company’s stock, using the formula Re = Rf + β × (Rm − Rf), where Rf is the risk-free rate (typically a government bond yield), β measures the stock’s volatility relative to the market, and Rm is the expected overall market return. The term (Rm − Rf) is the market risk premium.

Financial analysts and corporate finance teams use this cost of equity as a key input to the weighted average cost of capital (WACC), which in turn discounts future cash flows in company valuations and investment decisions. This calculator takes the risk-free rate, beta, and expected market return you enter and applies the CAPM formula directly.