Kroll regularly reviews fluctuations in the global economic and financial market conditions. These reviews warrant a periodic reassessment of the equity risk premium (ERP) and the accompanying risk-free rate and key inputs used to calculate the cost of equity capital in the context of the Capital Asset Pricing Model (CAPM) and other models used to develop discount rates.
Click here for the latest recommended U.S. guidance
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Click here for the latest recommended U.K. and Canada guidance
Discover how Kroll engaged with the client's Board to explain the concepts and nuances of cost of capital so that they could pursue new deals and unlock growth.
Kroll's Cost of Capital (Valuation Digital Solutions) and Valuation Services teams recently came together for a company seeking to improve its approach to estimate cost of capital used in cross-border M&A pricing. Through our combined expertise, the client was able to get sound data and insights for quantifying risk globally and is now pursuing new deals to further strengthen its growth strategy.
COVID-19 has generated an unprecedented reaction in both financial markets and economies worldwide, and the resulting uncertainty highlights significant challenges in estimating the cost of capital inputs in the current environment. The infographic below tracks the impact of COVID-19 on some of the financial market and economic indicators used to support the Kroll’s Global Cost of Capital Inputs: Recommended Equity Risk Premium and accompanying Normalized Risk-Free Rate.
Kroll examined the relationship between historical returns of over 13,000 publicly traded companies across a variety of geographies and industries and their ESG ratings to determine the correlation of ESG ratings to company performance.
Provides size premia, risk premia, equity risk premia, risk-free rates, betas and industry risk premia that can be used to estimate U.S. cost of capital.
Provides country risk premia, relative volatility factors, equity risk premia and international industry betas that can be used to estimate cost of capital globally.
Kroll's Cost of Capital Resource Center shares trending insights related to global economic and financial market conditions impacting cost of capital inputs and valuations. We deliver what you need to know to stay current.
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