Cost of Equity Capital Using the Bond-yield-plus-risk-premium Approach – Excel Template

Ivan Kitov
Ivan Kitov

The bond-yield-plus-risk-premium approach allows for calculating the cost of equity capital. It estimates the cost of common equity by summing the pre-tax cost of debt and the risk premium that captures the additional yield on a firm’s stock relative to its bonds. In practice, this can be used as an alternative to the CAPM.

Some other related topics you might be interested to explore are the Dividend Discount Model, Capital Asset Pricing Model, and Cost of Equity.

This is an open-access Excel template in XLSX format that will be useful for anyone who wants to work as a Banker, Investment Professional, Corporate Finance Practitioner, or Portfolio Manager.

You can now download the Excel template for free.

Cost of equity capital is among the topics included in the Corporate Finance module of the CFA Level 1 Curriculum.