The cost of equity also plays a role in the weighted average cost of capital (WACC). This combines the costs of debt and equity to determine a company's overall cost of capital.

Cost of Capital Formula & How To Calculate To reach an overall cost of capital, analysts generally calculate a cost of equity and a cost of debt, and then take the weighted average of them both.

The cost of equity is one of the thorniest problems in analyzing stocks. I outline the problem and present a novel solution based on industry yield and growth.