Cost of Capital: Applications and Examples by Shannon P. Pratt

By Shannon P. Pratt

A one-stop store for historical past and present pondering at the improvement and makes use of of premiums of go back on capital

Completely revised for this hugely expected 5th version, Cost of Capital comprises increased fabrics on estimating the elemental development blocks of the price of fairness capital, the safe expense, and fairness possibility top class. there's additionally dialogue of the volatility created through the monetary main issue in 2008, the following recession and unsure restoration, and the way these occasions have essentially replaced how we have to interpret the inputs to the versions we use to advance those estimates.

The publication contains new case reviews delivering entire dialogue of price of capital estimates for valuing a enterprise and damages calculations for small and medium-sized companies, cross-referenced to the chapters overlaying the idea and data.

  • Addresses fairness threat top class and the secure price, together with the influence of Federal Reserve actions
  • Explores tips to use Morningstar's Ibbotson and Duff Phelps threat top rate file data
  • Discusses the worldwide fee of capital estimation, together with a brand new dimension learn of ecu countries

Cost of Capital, 5th Edition places an emphasis on sensible program. consequently, this up to date version offers readers with particular entry to a spouse web site full of supplementary fabrics, permitting you to continue learning in a hands-on type lengthy after ultimate the book.

Show description

Read Online or Download Cost of Capital: Applications and Examples PDF

Best accounting books

Beyond Candlesticks : New Japanese Charting Techniques Revealed (Wiley Finance)

From the "Father of Candlesticks"--penetrating new jap concepts for forecasting and monitoring marketplace costs and bettering industry timing Steve Nison has performed it back. the guy who revolutionized technical research by means of introducing eastern candlestick charting suggestions to Western investors is back--this time with a quartet of strong eastern options by no means earlier than released or utilized in the West.

Flying on One Engine: The Bloomberg Book of Master Market Economists

This e-book deals a window right into a realm infrequently visible even by means of many subtle traders and policymakers—the equipment, insights, and predictions of Wall Street’s best industry economists. those hugely expert, commonly skilled notion leaders function within the round the clock crucible of the world’s monetary markets.

Ethics, Equity, and Regulation (Advances in Public Interest Accounting)

No better factor than the connection among ethics, fairness, and law may be stated to have emerged in those 'troubled times'. How will we account for carrying on with inequalities in an period selling enlightened social and financial connections? What mechanisms of perceptions and politics will allow coverage makers and students to increase major innovative switch?

Comparative International Accounting

Firmly tested because the prime textual content within the box, this new version of Comparative foreign Accounting has been essentially up to date to mirror the alterations which are taking place in monetary accounting and reporting because of the advent of IFRS. Comparative overseas Accounting takes a entire examine the overseas dimensions of economic accounting and reporting.

Additional info for Cost of Capital: Applications and Examples

Sample text

The numerator. , the net cash flow) on the investment in each future period over the life of the investment. 2. The denominator. A function of the discount rate, which is the cost of capital, which, in turn, is the required rate of return. This function is usually written as ð1 þ kÞn . where: k ¼ Discount rate n ¼ Number of periods into the future when the returns are expected to be realized Usually analysts and investors make the simplifying assumption that the cost of capital is constant over the life of the investment and use the same cost of capital to apply to each increment of expected future return.

The RE and AEG models always yield the same valuation and yield the same value as does the discounted net cash flow method when applied with the same valuation assumptions. Both the RE and AEG models begin with adjusted statements of accounting income. RE is the return on common equity (expressed in dollars) in excess of the cost of equity capital. AEG is earnings (assuming reinvestment of dividends) in excess of earnings growing at the cost of equity capital. 3)   NIn À ðke  BVnÀ1 Þ RE ¼ BVnÀ1 1 2 3 SBBI Valuation Edition Yearbook (Chicago: Morningstar, 2007), 13.

Part II covers the methods generally used to estimate cost of equity capital. Part III covers a variety of topics commonly encountered by the corporate financial officer. Part IV covers issues peculiar to closely held entities. Part V covers a variety of topics integral to users of cost of capital data. Part VI covers real property cost of capital issues. Part VII covers real-world cost estimation issues. The appendices provide a directory for further study and data sources. Notation System and Abbreviations Used in This Book A source of confusion for those trying to understand financial theory and methods is that financial writers have not adopted a standard system of notation.

Download PDF sample

Rated 4.60 of 5 – based on 47 votes