Finance Formulas / July 19, 2018 / Alia Marquez
Immediate payment annuities are a valuable retirement planning tool in that they provide a reliable and inexhaustible income stream. In effect, they function as a risk management tool that works like a mirror image of life insurance (which pays a benefit at death).
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. It is often used as a capital budgeting threshold for required rate of return. A firm's cost of equity represents the compensation the market demands in exchange for owning the asset and bearing the risk of ownership. The traditional formulas for cost of equity (COE) are the dividend capitalization model and the capital asset pricing model.
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