20
/ October
2009
How about an implied equity risk premium app for the iPhone?
Aswath Damodaran says that, during the crisis, he built a tool that recalculated the ERP every fifteen minutes. “This is a good way to produce heart attacks,” he says, because you can see how this supposedly fairly stable component of the cost of capital actually changes--in a six month period he found his ERP, available on his website, dropped from over 6, to 4, and then went back above 6. “I think I should do a version of this for the iPhone. Think of all the anxiety this would produce,” he joked with a room full of business appraisers in Boston.