Cost of Capital Professional
The Cost of Capital Professional platform provides valuation and finance professionals with up-to-date cost of capital data in a clear and user-friendly format. This tool is built on principles of simplicity, transparency, and credibility, helping users calculate cost of equity and weighted average cost of capital (WACC) with precision.
Detailed Description
Cost of Capital Professional allows users to obtain risk-free rates, equity risk premia, size premia, and industry risk premia based on the valuation date, company size, and industry. Users can build a cost of equity calculation using either the build-up method or the Capital Asset Pricing Model (CAPM), and generate a summary report that can be inserted into valuation documentation. Inputs, calculations, and sources can be downloaded to Excel for further use.
Key Features
- Supports replicability with independently calculated market returns
- Offers reliable data using long-standing CRSP sources
- Flexible timeframe options with data going back to 1928
- Based on trusted finance theory and prepared by industry expert Dr. Michael Crain
- Independent and objective methodology not tied to any financial institution
- Comprehensive support for Build-up Method and Modified CAPM analyses
For more information, visit BVResources.
Detailed Description
Detailed Description
Based on principals of simplicity, transparency, and credibility, the Cost of Capital Professional platform provides appraisers and financial professionals with the most current cost of capital data available in an easy-to-use format. Quickly get risk-free rates, equity risk premia, size premia, and industry risk premia based on your subject company’s valuation date, size, and industry. Use the build-up method or CAPM to create a cost of equity calculation you can use in your valuation, compute a weighted average cost of capital, access a summary document you can insert into your valuation report, and download all of your inputs, calculations, and sources to Excel.
- Replicability—Valid evidence supporting your claims should be reproducible. If it is not reproducible, it could be argued as coincidence. The Cost of Capital Professional platform offers an independent calculation of the market returns. Can you afford to not have proof of replication?
- Reliability—Rule 702 requires testifying experts use reliable methods and principles. The use of CRSP data has stood the test of time.
- Flexibility—Unlike other sources, you have control over the time period of historical return data for your analysis. You can choose which time horizon (e.g. specific historic years) that is appropriate for your case.The data goes back to 1928.
- Accuracy—The Cost of Capital Professional platform is based on the same finance theory used in the original SBBI series.It’s prepared by Dr. Michael Crain, a nationally recognized practitioner and educator on equity risk premia and size premia analyses.
- Objectivity—BVR is a publisher and not affiliated with any financial institution, so you can be sure our methodologies and results are independent and objective, as expected by courts, Internal Revenue Service, and professional standards of practice such as USPAP, IVS, and VS100 (SSVS-1).
- Comprehensiveness—For Build-up Method and MCAPM analyses.
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