What is the price of equity capital?

The price of equity capital refers to the return that investors require for investing in a company's equity, typically expressed as a percentage. It reflects the risk associated with owning the stock and can be estimated using models such as the Capital Asset Pricing Model (CAPM) or the Dividend Discount Model (DDM). Factors influencing the price of equity capital include market conditions, company performance, and investor expectations. Essentially, it represents the cost to the company of attracting and retaining equity investors.