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Cost of Capital - Advanced<span style='color: red;'> - 92 pages</span>
Date
November 10, 2013
The cost of capital is one the most important considerations in estimating value using the income approach. In this session, participants will learn the theory underlying the cost of capital, as well as the practical application of this theory using Morningstar/Ibbotson SBBI and Duff & Phelps risk premium data. Highlights will include:
• Alternative methods for estimating the discount and capitalization rates (Build Up, CAPM)
• Alternative sources of data (Morningstar/Ibbotson, Duff & Phelps, private company surveys and data)
• Determination of the values for the components of the cost of capital (e.g., risk free rate, equity risk premium,
size premium and specific company risk)
• Estimation of the long-term growth rate
• Residual (ongoing) value models
• Alternative methods for estimating the discount and capitalization rates (Build Up, CAPM)
• Alternative sources of data (Morningstar/Ibbotson, Duff & Phelps, private company surveys and data)
• Determination of the values for the components of the cost of capital (e.g., risk free rate, equity risk premium,
size premium and specific company risk)
• Estimation of the long-term growth rate
• Residual (ongoing) value models
Speaker
Roger J. Grabowski, FASA
Managing Director, Duff & Phelps
