MENU CLOSE

Cost of equity

Cost of equity is a return a company requires to decide if an investment meets capital return requirements.

Companies often use it as a capital budgeting threshold for necessary rate of return. Company’s cost of equity stands for the compensation the security or equity token market demands in exchange for owning the digital asset and bearing the risk of ownership.

It is assessed according to the formula when dividends per share expected to be received in the upcoming year are divided on digital asset’s current security or equity token market value, and then added to the growth rate of dividends.