The cost of capital is typically calculated using the Weighted Average Cost of Capital (WACC) formula, which takes into account the proportion of equity and debt in the company's capital structure. The formula is: WACC = (E/V * Re) + ((D/V * Rd) * (1 - Tc)) Where:
E = Market value of equity V = Total market value of equity and debt Re = Cost of equity D = Market value of debt Rd = Cost of debt Tc = Corporate tax rate