CAPM measures the required rate of return on equity investments, and it is an important element of modern portfolio theory (MPT) and discounted cash flows (DCF) valuation. The market risk premium ...

In the formula, the risk premium—a rate of return that’s greater ... the expected value calculated from the CAPM as the cost of equity. The company value is divided by the number of shares ...

Chacko, George C., Peter A. Hecht, Vincent Dessain, and Anders Sjoman. "Deutsche Bank: Discussing the Equity Risk Premium." Harvard Business School Case 205-040 ...

This formula utilizes the total average ... then the market risk premium is 12% - 4%, or 8%. The cost of equity capital, as determined by the CAPM method, is equal to the risk-free rate plus ...

The cost of equity funding is generally determined using the capital asset pricing model (CAPM). This formula utilizes ... subdivided into the market risk premium and the risk-free rate.