Best resources for calculating country-specific COC, brought to you by the globally minded ASA

BVWireIssue #109-2
October 11, 2011

The ASA’s 30th Annual Advanced Business Valuation conference in Chicago this week reflected the country’s broader concern with international markets, starting with the first general session: “International Cost of Capital—A Walk Around the Globe,” by Nancy Czaplinski (American Appraisal). Via a case study, Czaplinski applied six different cost of capital (COC) models to use in today’s global environment, each reaching a slightly different result. “Which is correct?” she asked ASA attendees, not a rhetorical question so much as a practical one that analysts will have to answer more frequently as our economies become more interdependent and foreign investments increase. “As a valuation professional you have to go through the models and see what works, depending on your project [and where it is located]. You have to look at the risks specific to that country and local economy and step back and logically assess how those factors impact your valuation and what adjustments you have to make.”

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