# There are many ways to calculate the cost of equity.

**There are many ways to calculate the cost of equity. One fairly simple way is to consider the additional dividend that would have to be paid on the shares of stock that are issued to maintain the expected return for all investors. What would be the additional “cost” if the dividend is 15¢ per share each quarter, and you issue 200,000 new shares? What is the annual return to the investor if the stock price is $20 and there is no change in price? **