How do you calculate COE and COC

**Calculating Cost of Equity (COE)**:

1. **Dividend Capitalization Model**:
- **Formula**: COE = DPS / CMV + GRD
- **Variables**:
- DPS: Dividends per share, for next year
- CMV: Current market value of stock
- GRD: Growth rate of dividends
2. **Capital Asset Pricing Model (CAPM)**:
- **Formula**: COE = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
- **Variables**:
- Risk-Free Rate: The return on an investment that is free of risk (e.g., US Treasury Bond yield)
- Beta: Measures the stock's volatility relative to the market
- Market Return: The average return of the market

**Calculating Weighted Average Cost of Capital (WACC)**:

1. **Formula**: WACC = (E/V * RE) + (D/V * RD)
- **Variables**:
- E/V: Proportion of equity financing
- D/V: Proportion of debt financing
- RE: Cost of equity (as calculated above)
- RD: Cost of debt (interest rate on debt)

In summary, calculating COE and COC requires specific formulas and variables. The COE is typically calculated using the dividend capitalization model or the CAPM, depending on whether the company pays dividends or not. The COC, on the other hand, is a weighted average of the cost of equity and debt, where the weights are the proportions of equity and debt in the company's capital structure.