Geared cost of equity & Ungeared cost of equity

In future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.

The geared cost of equity is the actual cost of equity in a geared company.

The ungeared cost of equity is what the cost of equity would be if there was no gearing in the company (and will be lower because with no gearing there is less risk for shareholders). The most common use of the unguarded cost of equity in the exam is when you are required to do Adjusted Present Value calculations.

All of this is explained in detail in my free lectures.

This is explained in full in my free lectures on CAPM.