Is cost of equity the same as CAPM?

No. Cost of equity is the number you are after, and CAPM is one formula for estimating it. CAPM says cost of equity equals the risk-free rate plus beta times the equity risk premium. At 5% plus 1.2 times 5%, that comes to 11%.

CAPM is the most popular method because the inputs are easy to find for a listed company. William Sharpe published it in 1964, and most corporate finance courses teach it first. The CAPM cost of equity guide walks through each input.

Other methods give different answers for the same company. The Gordon growth model works from the stock price and dividends: a $50 stock paying $2.00 that grows 4% a year implies 8.16%. The build-up method stacks premiums for a private company. When the methods disagree, analysts compare them and pick a figure they can defend. See how to calculate cost of equity without beta.