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Cost of equity

This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.

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June 28, 2019 at 5:02 pm #521470
aadil1234
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Sir if the Co. has no gearing and is only being funded through equity than will we use Ba instrad of Be in the CAPM formula to calculate cost of equity (ke)?
June 29, 2019 at 9:16 am #521510
John Moffat
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If there is no gearing then yes, because the equity beta will be equal to the asset beta. It is only gearing that makes the two different.
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