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Is Your Cost of Capital Data Backing You Into a Corner?

In a recent court case, the valuation expert tried to use professional judgment but the data being used did not support her opinion. The expert could not adequately explain why she chose not to go where the data led her.

Concerns Over Data Security in Online Cost of Capital Tools

Business Valuation Update attended the recent NYSSCPA business valuation conference in New York City where several attendees expressed concerns about entering sensitive client data into online tools for estimating the cost of capital. The providers of the Duff & Phelps Cost of Capital Navigator and BVR’s Cost of Capital Professional respond to these concerns.

Which ERP camp are you in? Please take our survey.

When you drive your car, should you look through your windshield or the rearview mirror?

20- and 10-year spot yields on T-bonds favored for risk-free rate

Two-thirds of survey respondents say they use the spot yield on Treasury bonds for their risk-free rate when developing an estimate for the cost of capital, according to BVWire’s latest survey.

Inclusion of Betas in CCPro Platform Puts the Spotlight on the IRP

Two sources of industry betas are now included in BVR’s Cost of Capital Professional (CCPro) to help in estimating the industry risk premium (IRP) component of the buildup method for developing the cost of capital for a private company. For appraisers that choose to use an IRP, care must be taken and there are some important factors to consider.

Early survey results on risk-free rates of choice

Preliminary results from our latest cost of capital survey reveal that the spot yield on the 20-year U.S. Treasury bond is most often used as the basis for the risk-free rate.

Part 2 of our cost of capital survey: risk-free rates

Please take part in the second in our series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.

Is someone peeking at your cost of capital estimates?

If you use one of the new online tools that help you estimate the cost of capital, you may be worried about data security.

Interesting results from our cost of capital survey

A significant number of valuation experts look to the private capital markets when estimating the cost of capital for a private firm, according to a BVWire survey.

Should business valuators use ‘implied’ equity risk premiums? Damodaran says yes

The free, 11th annual update to ‘Equity Risk Premiums (ERP): Determinants, Estimation and Implications—The 2019 Edition’ is now available from Professor Aswath Damodaran (New York University Stern School of Business).

‘We’re killing ourselves!’ with cost of capital complexity

That was the cry of one attendee at the NACVA conference in Salt Lake City during a session titled “The Cost of Capital Conundrum.”

Reminder: Take our cost of capital survey

Our thanks to those of you who took the first in a series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.

Damodaran posts 2019 edition of ERP paper

The “dean of valuation,” Professor Aswath Damodaran (New York University Stern School of Business) has posted “Equity Risk Premiums (ERP): Determinants, Estimation and Implications—The 2019 Edition.”

Participate in BVWire’s cost of capital surveys

BVWire is a conducting a series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.

Industry betas now included in CCPro platform

Users of BVR’s new Cost of Capital Professional (CCPro) platform now have the choice of two sources of industry betas to help in estimating the industry risk premium (IRP) component of the buildup method for developing the cost of capital for a private company.

New cost of capital resources available

Two sources of industry betas were introduced this week in BVR’s Cost of Capital Professional (CCPro) to help in estimating the industry risk premium (IRP) component of the buildup method for developing the cost of capital for a private company.

Two Articles Addressing Firm Quality and Its Impact on the Size Effect

The authors discuss two recent papers that present the concept of firms’ quality and show that it plays an important role in understanding the size effect. Also discussed are papers that present a differing view.

No End in Sight to Size Effect Debate

A look at several recent articles on the so-called size premium that perpetuate the debate on this topic. Some appraisers feel that the size effect has diminished or disappeared since it was first documented in 1981, while others feel it is alive and well.

Appraiser Shuns Public Data for Private Cost of Capital

One appraiser has done hundreds of valuations of small owner-operated firms by looking to private capital markets to estimate cost of capital. This eliminates the need to make all of the many assumptions and adjustments to convert data from actively traded stocks into proxies for private-company valuation.

iiBV releases webinar on international cost of capital

The International Institute of Business Valuers (iiBV) is expanding their training offerings for business valuators.

Latest paper on the vanishing size effect

A new academic paper, “Why Has the Size Effect Disappeared?,” explores the disappearance of the small-firm effect after the early 1980s.

Newest survey on private rates of return

Some appraisers are not comfortable using public market data when estimating the cost of capital for a private company.

Do you have a Rube Goldberg cost of capital process?

Wildly complicated gadgets designed to do very simple tasks was the specialty of Rube Goldberg, the Pulitzer Prize-winning cartoonist, sculptor, author, engineer, and inventor.

Upgrade to the Cost of Capital Professional highlights free webinar

A number of new enhancements to BVR’s Cost of Capital Professional platform were explained during a recent free webinar on March 6.

Cost of Capital Professional: Gain the Edge With New Enhancements

The newest resource for developing cost of capital estimates is now even better. Since January, users have been able to use beta-adjusted size premiums, select arithmetic or geometric averages, compute weighted average cost of capital (WACC), and more. With the new enhancements, the Cost of Capital Professional has maintained its principles of simplicity, transparency, and flexibility in a world where the inputs to cost of capital have become so complex that the risk of making ...

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