The chapter discusses a method called the build-up model for estimating the cost of common equity capital. This model uses the risk-free rate and risk premium, which includes general equity risk premium, small-company risk premium, and company-specific risk premium. The cost of equity capital is estimated by combining these components. Practitioners typically use long-term government bond yields as the risk-free rate and calculate the equity risk premium based on these yields. The size premium and company-specific risk premium are added to the generalized equity risk premium. Two examples using Morningstar data and Duff & Phelps Size Study data are presented to illustrate the build-up method.