Cost of Equity
Unlike debt,
which the company must pay at a set rate of interest, equity does not have a
concrete price that the company must pay. But that doesn't mean that there is
no cost of equity. Equity shareholders expect to obtain a certain return on
their equity investment in a company. Therefore, the cost of equity is basically what it costs the
company to maintain a share price that is satisfactory (at least in theory) to
investors. T
