Poll reveals methods and data sources for ERP

BVWireIssue #268-3
January 22, 2025

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

The Kroll Cost of Capital Navigator continues to be widely used and accepted for estimating cost of equity (COE), per the results of a poll during BVR’s recent Cost of Capital Virtual Conference. Over 100 attendees were asked: Which methods/data sources do you use for the equity risk premium (ERP) in your cost of equity estimates? (select all that apply). The responses:

 Kroll Navigator 61%
 BVR Cost of Capital Professional 29%
 Supply-side ERP (Kroll) 26%
 Long-term historical average (Kroll) 22%
 Professor Aswath Damodaran’s implied ERP 7%
 Other historical or implied ERP sources 4%
 Professor Pablo Fernandez’s ERP survey 0%
 Other/not applicable 9%
Other poll questions asked about cost of capital models used, the size premium, company-specific risk frameworks, and whether ESG is factored into estimates. We will present more results in next week’s issue.

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