Kroll lowers recommended ERP to 5.5%

BVWireIssue #249-3
June 21, 2023

cost of capital
cost of capital, discount rate, private company valuation, risk analysis, cost of equity, equity risk premium (ERP)

Kroll has decreased its recommended U.S. equity risk premium (ERP) from 6.0% to 5.5% when developing USD-denominated discount rates as of June 8, 2023. This is matched with the higher of a normalized risk-free rate of 3.5% or the spot 20-year U.S. Treasury yield as of the valuation date, says the firm in a recent update. In the same update, Kroll says the current recommended ERP in the eurozone (from a German investor perspective) remains in the range of 5.5% to 6.0%.
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