Skip to Main Content
Valuation
book

Valuation

by Rajesh Kumar
November 2015
Intermediate to advanced content levelIntermediate to advanced
514 pages
17h 1m
English
Academic Press
Content preview from Valuation
4

Estimation of cost of capital

Abstract

The cost of capital is generally the weighted average cost of capital. The weighted average cost of capital is the weighted averages of cost of equity and cost of debt. Risk-free rate and risk premium are two major building blocks for the calculation of cost of equity. Financial analysts use yield-to-maturity of different bonds based on the period of valuation. The yield on long-term treasury bond can be used as risk-free rate. The determination of risk premium is an important step in the calculation of the cost of equity. The equity risk premium is generally estimated as the difference between the average annual equity index returns and the average return on treasury bonds. Beta can be estimated through ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

The Little Book of Valuation

The Little Book of Valuation

Aswath Damodaran
Equity Asset Valuation, Second Edition

Equity Asset Valuation, Second Edition

CFA Thomas R. Robinson, CFA John D. Stowe, CFA Elaine Henry, CFA Jerald E. Pinto

Publisher Resources

ISBN: 9780128025437