The CAPM cost of equity for JPMorgan Chase & Co. at 2026-06-30. A practitioner reference for equity-only discount rates — dividend discount models, residual-income frameworks, and the Ke input in enterprise-value DCFs. Sourced inputs, transparent walkthrough, refreshed quarterly.
| Component | Value | Source / Assumption |
|---|---|---|
| Risk-free rate (Rf) | 4.25% | 10-year US Treasury yield at snapshot date |
| Beta (β) | 1.10 | 5-year weekly regression vs S&P 500, Blume-adjusted |
| Equity risk premium (ERP) | 5.55% | Damodaran implied ERP, June 2026 update |
| Cost of Equity (Ke) | 10.40% | CAPM: Rf + β × ERP = 4.25% + 1.10 × 5.55% |
CAPM is the practitioner default because it's defensible in a boardroom in one line. But the Fama-French three-factor model adds a size premium (SMB) and a value premium (HML) that meaningfully improve fit on empirical returns. For JPMorgan Chase & Co., the illustrative FF3 cost of equity is:
| Factor | Loading | Premium | Contribution |
|---|---|---|---|
| Market (Rm − Rf) | 1.10 | 5.55% | 6.11% |
| Size (SMB) — illustrative loading 0.20 | 0.20 | 1.10% | 0.22% |
| Value (HML) — illustrative loading 0.15 | 0.15 | 1.85% | 0.28% |
| Risk-free base | — | — | 4.25% |
| Fama-French Ke | — | — | 10.86% |
Practitioner note: the SMB and HML loadings above are illustrative reference values. For a defensible FF3 estimate, run a five-year monthly regression against the Fama-French factor series and use the empirical loadings. FF3 typically shifts Ke by 30-90 bps versus CAPM for large-cap issuers — enough to matter, not enough to change the recommendation on most valuations.
The published beta of 1.10 reflects JPMorgan Chase & Co.'s current capital structure. Practitioners doing peer-based valuation (or a re-lever for a target capital structure) should decompose:
| Step | Value | Formula |
|---|---|---|
| Observed (levered) beta | 1.10 | 5-yr weekly regression, Blume-adjusted |
| Assumed D/E | 0.15 | Market values from the companion WACC page |
| Assumed tax rate | 21% | Blended federal + state |
| Unlevered beta (asset beta) | 0.98 | βL / [1 + (1 − t) × D/E] |
Use the unlevered beta when the peer's capital structure differs materially from the target's. Re-lever at the target D/E before feeding back into CAPM.
Cost of equity for JPMorgan Chase & Co. at various beta and ERP combinations (risk-free rate held at 4.25%):
| Beta \ ERP | 4.75% | 5.25% | 5.55% | 5.85% | 6.35% |
|---|---|---|---|---|---|
| 0.90 | 8.53% | 8.98% | 9.25% | 9.52% | 9.96% |
| 1.00 | 9.00% | 9.50% | 9.80% | 10.10% | 10.60% |
| 1.10 | 9.48% | 10.03% | 10.36% | 10.69% | 11.23% |
| 1.20 | 9.95% | 10.55% | 10.91% | 11.27% | 11.87% |
| 1.30 | 10.43% | 11.07% | 11.46% | 11.86% | 12.50% |
A cost of equity of 10.40% is the equity-only discount rate to plug into a dividend discount model, a residual-income model, or any framework that discounts flows accruing solely to equityholders. If you're building an enterprise-value DCF, use the companion WACC of 4.8% instead — Ke feeds into WACC through the equity weight, but is not itself the enterprise discount rate.
For JPMorgan Chase & Co. specifically, the beta of 1.10 anchors the calculation. Where practitioners will reasonably disagree: whether to use a raw historical beta, a Blume-adjusted beta (the Baratelli reference default), or an industry-median beta. Blume-adjusted pulls the estimate toward 1.0 on the theory that betas revert over long horizons; industry-median smooths noise for issuers with thin trading history. All three are defensible; the recommendation is to disclose which convention you're using and hold it constant across peer comparisons.
On Damodaran ERP: the 5.55% ERP is the June 2026 implied premium from Damodaran's monthly update — the defensible reference across the practitioner community. Historical arithmetic-average ERPs (7%+) overstate today's premium; historical geometric averages (5.0-5.5%) triangulate close to the implied number.
The full cost-of-equity walkthrough, the FF3 template, and 25 other Wall Street models are in the Baratelli Financial Modeling Toolkit — $99.
All 73 companies in the Baratelli Cost of Equity reference: The full Cost of Equity Reference Library (73 companies) — sorted, filterable.
Companion WACC calculation: The JPM WACC reference — adds after-tax cost of debt and capital-structure weighting.
DCF methodology hub: The Baratelli DCF Reference — where Ke and WACC actually get used.
Interactive calculator: The WACC + Cost of Equity calculator — substitute your own inputs.