Corporate finance · Required return
Cost of Equity Calculator (CAPM)
Estimate the return shareholders require using a risk-free rate, equity beta, and market risk premium. Start with your own assumptions; the defaults are an example, not current market data.
Your CAPM assumptions
Rates are annual percentages. Use consistent currency and real/nominal assumptions. Negative beta and rates are allowed.
Estimated cost of equity
10.00%
Annual required return under your CAPM assumptions
- Risk-free component
- 4.00%
- Beta × risk premium
- 6.00%
4% + 1.2 × 5.00% = 10.00%
How beta changes the estimate
- Beta 1.009.00%
- Beta 1.2010.00%
- Beta 1.4011.00%
Formula and a worked example
CAPM cost of equity = risk-free rate + beta × equity risk premium. If you enter expected market return, the premium is market return minus the risk-free rate. With 4%, beta 1.2, and a 5% premium, the estimate is 10%.
NYU Stern: Estimating Discount Rates describes the CAPM model and its inputs. Assumptions reviewed September 30, 2026.
Choose the right equity calculation
This tool estimates a forward-looking required return, not realized investment performance, a stock price, or guaranteed returns. It does not estimate beta from price history or include country, size, or company-specific premiums. WACC additionally accounts for debt funding and taxes.
For historical portfolio risk, use the alpha and beta calculator. For home value minus mortgage balance, use the home equity calculator.
About This Calculator
Calculate CAPM cost of equity from the risk-free rate, beta, and equity risk premium or expected market return. Compare assumptions and see the formula.
The SuperCalc Editorial Team maintains calculator interfaces, formula notes, examples, and supporting explanations. Methods, assumptions, source links, and review depth vary by calculator and are documented on the relevant page where available.