Download or read book Cost of Capital written by Shannon P. Pratt and published by John Wiley & Sons. This book was released on 2008-02-25 with total page 448 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this long-awaited Third Edition of Cost of Capital: Applications and Examples, renowned valuation experts and authors Shannon Pratt and Roger Grabowski address the most controversial issues and problems in estimating the cost of capital. This authoritative book makes a timely and significant contribution to the business valuation body of knowledge and is an essential part of the expert's library.

Download or read book Estimation of the Cost of Equity Capital written by Confidence Worlu-Ohia Amadi and published by . This book was released on 1994 with total page 324 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Cost of Capital in Litigation written by Shannon P. Pratt and published by John Wiley & Sons. This book was released on 2010-10-26 with total page 323 pages. Available in PDF, EPUB and Kindle. Book excerpt: Cost of Capital in Litigation addresses cost of capital issues in litigation and discusses major decisions, highlighting how to avoid errors that have often been made by experts. The book helps the attorney and valuation expert understand the decisions within the context of the theory of cost of capital and includes a chapter on cross-examining experts on cost of capital issues. Throughout, there are citation to relevant material and cross-reference to Cost of Capital: Applications and Examples, Fourth Edition.

Download or read book Estimating the Expected Cost of Equity Capital Using Analysts Consensus Forecasts written by Holger Daske and published by . This book was released on 2008 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we develop a technique for estimating a firm's expected cost of equity capital derived from its stock price and analysts' consensus forecasts. Our estimation method based on the residual income valuation model builds on Gebhardt/Lee/Swaminathan (2001) and Easton/Taylor/ShroffSougiannis (2002), but extends and refines their approaches by explicitly allowing daily estimation and using only publicly available information at that estimation date. We apply this technique to estimate the expected cost of equity capital at the market, industry and individual firm level using historical German data from 1989-2002 and examine firm characteristics which have been systematically related to these estimated return expectations.

Download or read book Estimating beta and Cost of Equity Capital for Non traded Transportation Companies written by Sascha Heller and published by diplom.de. This book was released on 2014-04-11 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inhaltsangabe:Introduction: Estimating the cost of equity capital has two major implications. First, it reflects the return to a company s stock which an equity investor expects to receive from his investment. He makes his decision upon whether he could earn a higher rate of return in an alternative investment of equivalent risk. Second, a company must earn the cost of capital (both debt and equity) through its undertaken projects. It is hence relevant for decisions on undertaking positive net present value projects which are of similar risk as the company s average business activities. It also substantially influences the pricing of an entire firm as far as the valuation is based on a discounted cash flow model. A lot of effort has been done in the past to achieve accurate models which precisely determine this cost. Building on the modern portfolio theory of Harry Markowitz, a widely used and commonly known model in this context is the Capital Asset Pricing Model (CAPM). Introduced by several researchers in the 1960s, it is still one of the most applied methods for practitioners. However, it suffers from several shortcomings, including statistical caveats, economic assumptions, the absence of market frictions and the behaviour of market participants. An upgrade to this model was provided by Stephen Ross which has resulted in the Arbitrage Pricing Theory (APT). It combines several risk factors in addition to one market proxy, as it is the case in the CAPM, and is less restrictive in its assumptions. But both CAPM and APT require observable market data, i.e. stock prices, of the analysed companies. These models thus only work for publicly listed firms. If research should be done on non-traded companies, however, an alternative methodology must be applied. In general, data from the balance sheet, the income statement and the cash flow statement are available for both listed and non-listed companies. While accounting data have widely been used in the past as well and have been assumed to provide valuable information in explaining stock returns, this line of research has dissipated over time. Only a few key figures, such as size and financial leverage, are still considered to be relevant. However, they can be used to indirectly estimate a firm s beta by assessing their explanatory power in a CAPM or APT framework. This methodology is particularly beneficial for firms which are not listed because there cannot be observed any stock price movements. [...]

Download or read book Estimating the Cost of Capital Implied by Market Prices and Accounting Data written by Peter Easton and published by Now Publishers Inc. This book was released on 2009 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt: Estimating the Cost of Capital Implied by Market Prices and Accounting Data focuses on estimating the expected rate of return implied by market prices, summary accounting numbers, and forecasts of earnings and dividends. Estimates of the expected rate of return, often used as proxies for the cost of capital, are obtained by inverting accounting-based valuation models. The author describes accounting-based valuation models and discusses how these models have been used, and how they may be used, to obtain estimates of the cost of capital. The practical appeal of accounting-based valuation models is that they focus on the two variables that are commonly at the heart of valuations carried out by equity analysts -- forecasts of earnings and forecasts of earnings growth. The question at the core of this monograph is -- How can these forecasts be used to obtain an estimate of the cost of capital? The author examines the empirical validity of the estimates based on these forecasts and explores ways to improve these estimates. In addition, this monograph details a method for isolating the effect of any factor of interest (such as cross-listing, fraud, disclosure quality, taxes, analyst following, accounting standards, etc.) on the cost of capital. If you are interested in understanding the academic literature on accounting-based estimates of expected rate of return this monograph is for you. Estimating the Cost of Capital Implied by Market Prices and Accounting Data provides a foundation for a deeper comprehension of this literature and will give a jump start to those who have an interest in these topics. The key ideas are introduced via examples based on actual forecasts, accounting information, and market prices for listed firms, and the numerical examples are based on sound algebraic relations.

Download or read book Estimating a Firm s Expected Cost of Equity Capital Using Consensus Forecasts written by Holger Daske and published by . This book was released on 2004 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we propose a technique for estimating a firm's expected cost of equity capital derived from analyst consensus forecasts and stock prices. Building on the work of Gebhardt/Lee/Swaminathan (2001) and Easton/Taylor/Shroff/Sougiannis (2002), our approach allows daily estimation, using only publicly available information at that date. We suggest this technique for application in investment and capital budgeting decisions at the company level. We then estimate the expected cost of equity capital at the market, industry and individual firm level using historical German data from 1989-2002 and examine firm characteristics which are systematically related to these estimates. Finally, we demonstrate the potential practical applicability of the concept in a contemporary case study for DaimlerChrysler and the European automobile industry.

Download or read book Cost of Capital written by Shannon P. Pratt and published by John Wiley & Sons. This book was released on 2014-03-12 with total page 1344 pages. Available in PDF, EPUB and Kindle. Book excerpt: A one-stop shop for background and current thinking on the development and uses of rates of return on capital Completely revised for this highly anticipated fifth edition, Cost of Capital contains expanded materials on estimating the basic building blocks of the cost of equity capital, the risk-free rate, and equity risk premium. There is also discussion of the volatility created by the financial crisis in 2008, the subsequent recession and uncertain recovery, and how those events have fundamentally changed how we need to interpret the inputs to the models we use to develop these estimates. The book includes new case studies providing comprehensive discussion of cost of capital estimates for valuing a business and damages calculations for small and medium-sized businesses, cross-referenced to the chapters covering the theory and data. Addresses equity risk premium and the risk-free rate, including the impact of Federal Reserve actions Explores how to use Morningstar's Ibbotson and Duff Phelps Risk Premium Report data Discusses the global cost of capital estimation, including a new size study of European countries Cost of Capital, Fifth Edition puts an emphasis on practical application. To that end, this updated edition provides readers with exclusive access to a companion website filled with supplementary materials, allowing you to continue to learn in a hands-on fashion long after closing the book.

Download or read book Estimating the Cost of Equity Capital for a Division of a Firm written by and published by . This book was released on 1989 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Cost of Equity Capital and Its Estimation written by Martin Lally and published by McGraw-Hill Europe. This book was released on 1999 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: Deals with the issue of how to estimate the cost of capital, a central issue in modern finance theory and practice. This volume is a well-researched reference publication with a balanced approach, and its objective is to provide material in a single resource that reflects the issues, alternatives and framework.

Download or read book On Cost of Equity Capital Estimation written by Joseph M. Kahn and published by . This book was released on 1985 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book A Random Coefficients Approach to Estimation of the Cost of Equity Capital for Electric Utilities written by Howard Elliott Thompson and published by . This book was released on 1981 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Estimating the Cost of Equity Capital Using Time Series Analysis written by Howard Elliott Thompson and published by . This book was released on 1983 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Cost of Capital written by Shannon P. Pratt and published by John Wiley & Sons. This book was released on 2003-02-28 with total page 354 pages. Available in PDF, EPUB and Kindle. Book excerpt: An authoritative text on cost of capital for both the nonprofessional and the valuation expert -- now revised and expanded In endeavoring to practice sound corporate finance, there is perhaps nothing so critical, nor slippery, as cost of capital estimation. The second edition of Cost of Capital: Estimation and Applications combines a state-of-the-art treatise on cost of capital estimation with an accessible introduction for the nonprofessional. This comprehensive yet usable guide begins with an exposition of basic concepts understandable to the lay person and proceeds gradually from simple applications to the more complex procedures commonly found in the marketplace. New features of the revised and expanded Second Edition include chapters on Economic Value Added (EVA) and reconciling cost of capital in the income approach with valuation multiples in the market approach, as well as expanded coverage of cost of capital in the courts and handling discounts for marketability. Cost of Capital remains an incomparable resource for all parties interested in effective business valuation.

Download or read book Estimating SMEs Cost of Equity Using a Value at Risk Approach written by F. Beltrame and published by Springer. This book was released on 2014-06-10 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt: As well as reviewing traditional models, this book proposes an alternative model for estimating the cost of risk capital. This model, known as CaRM (Capital at Risk Model), bases the cost estimate of risk capital on VaR (Value at Risk) for the very first time. This book is an ideal resource for developing valuation research in SMEs.

Download or read book Estimating Expected Cost of Equity Capital written by Christine Botosan and published by . This book was released on 2001 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we estimate the expected cost of equity capital using the unrestricted form of the classic dividend discount formula and examine the extent to which these estimates (rDIV ) reliably proxy for expected cost of equity capital. We find that the rDIV estimates are associated with six risk proxies suggested by theory and prior research in a manner consistent with expectations; the explanatory power of the model is approximately 26%. Based on these results we conclude that the rDIV estimates are a valid proxy for expected cost of equity capital.Estimating rDIV requires a terminal value forecast. Since such forecasts are not always available we also assess the reliability of estimates produced by imposing three alternative terminal value assumptions on the dividend discount model. Specifically, rGORDON (Gordon and Gordon (1997)) imposes a firm-specific assumption; rGLS (Gebhardt, Lee and Swaminathan (2001)) imposes an industry-specific assumption and rOJN (Ohlson and Juettner-Nauroth (2000) and Gode and Mohanram (2001)) imposes an economy-wide assumption. We find that the rGORDON estimates have the highest correlation with rDIV and behave in a manner consistent with expectations with respect to their relationships with the risk proxies. We conclude that, when sufficient data to estimate rDIV is unavailable, rGORDON represents a reasonable substitute. Finally, our data indicate that although rDIV and rGORDON reflect the distribution of expected cost of equity capital, neither measure (nor any of the alternatives) should be relied upon to estimate the magnitude of expected cost of equity capital and/or implied risk premiums.

Download or read book Estimation of the Cost of Equity Capital for a Sample of Electric Utilities 1966 to 1987 written by Matthew P. McWilliams and published by . This book was released on 1990 with total page 108 pages. Available in PDF, EPUB and Kindle. Book excerpt: