Cost of Capital
Applications and Examples
(Sprache: Englisch)
The new edition of Cost of Capital: Estimation and Applications Third Edition includes new materials on using the Duff&Phelps Risk Premium Report data on size and fundamental risk, new chapters on cost of capital issues for financial reporting and...
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The new edition of Cost of Capital: Estimation and Applications Third Edition includes new materials on using the Duff&Phelps Risk Premium Report data on size and fundamental risk, new chapters on cost of capital issues for financial reporting and transfer pricing, updated discussion of Cost of Capital in the Courts with comprehensive set of case references, and Reconciling Cost of Capital among various forms of the Income Approach and expanded material reconciling the Income Approach with Valuation Multiples in the Market Approach. Throughout, there are new quotes and citation to relevant material.
Praise for the Third Edition of Cost of Capital "Shannon Pratt and Roger Grabowski have not only brought together all of the issues in the cost of capital computation but have done so in a way that melds timely advice for practitioners with serious debate about the best practices in the area; it belongs on the bookshelves of serious valuation practitioners." -- Aswath Damodaran, Professor, New York University, Stern School of Business
"One of the four traits of great executives is their understanding of the fundamental reality of wealth creation-successful organizations invest to earn a rate of return in excess of their cost of capital. Organizations need assistance in better understanding and estimating the cost of capital and in communicating their results. This book can be a valuable tool for executives and their organizations." -- Geoffrey Colvin, Editor at Large, Fortune
"Cost of Capital, authored by two of the leading valuation experts in North America, is a comprehensive resource for financial professionals engaged in business appraisal, fair value measurement for financial reporting, corporate finance, damage quantification, and transfer pricing. This authoritative book makes a timely and significant contribution to the business valuation body of knowledge and is clearly an essential part of the expert's library." -- Richard M. Wise, FASA, MCBA, CVA, FCBV, FCA, Managing Partner, Wise, Blackman LLP
"I do not think you will find, anywhere, as comprehensive a book on cost of capital as this impressive Third Edition. Pratt and Grabowski have presented a great deal of valuable research in a very understandable manner. They also provide information and opinions that challenge some generally accepted data sources and applications, particularly, as it pertains to equity risk premiums. This book is a must-read." -- James R. Hitchner, CPA/ABV, ASA, Managing Director, The Financial Valuation Group, Editor in Chief, Financial Valuation and Litigation Expert journal
"Shannon Pratt and Roger Grabowski have combined painstaking research and writings from other contributors, with thoughtful commentary, views and advice surrounding the topic of the cost of capital, into a single volume. It is written in a style that should appeal to a wide variety of constituents. It advances the state of reference material on this topic for valuation practitioners and will also provide a solid foundation for continued debate and research on the topic for many years to come." -- Anthony V. Aaron, Americas Leader, Quality and Risk Management, Ernst & Young Transaction Advisory Services
"One of the four traits of great executives is their understanding of the fundamental reality of wealth creation-successful organizations invest to earn a rate of return in excess of their cost of capital. Organizations need assistance in better understanding and estimating the cost of capital and in communicating their results. This book can be a valuable tool for executives and their organizations." -- Geoffrey Colvin, Editor at Large, Fortune
"Cost of Capital, authored by two of the leading valuation experts in North America, is a comprehensive resource for financial professionals engaged in business appraisal, fair value measurement for financial reporting, corporate finance, damage quantification, and transfer pricing. This authoritative book makes a timely and significant contribution to the business valuation body of knowledge and is clearly an essential part of the expert's library." -- Richard M. Wise, FASA, MCBA, CVA, FCBV, FCA, Managing Partner, Wise, Blackman LLP
"I do not think you will find, anywhere, as comprehensive a book on cost of capital as this impressive Third Edition. Pratt and Grabowski have presented a great deal of valuable research in a very understandable manner. They also provide information and opinions that challenge some generally accepted data sources and applications, particularly, as it pertains to equity risk premiums. This book is a must-read." -- James R. Hitchner, CPA/ABV, ASA, Managing Director, The Financial Valuation Group, Editor in Chief, Financial Valuation and Litigation Expert journal
"Shannon Pratt and Roger Grabowski have combined painstaking research and writings from other contributors, with thoughtful commentary, views and advice surrounding the topic of the cost of capital, into a single volume. It is written in a style that should appeal to a wide variety of constituents. It advances the state of reference material on this topic for valuation practitioners and will also provide a solid foundation for continued debate and research on the topic for many years to come." -- Anthony V. Aaron, Americas Leader, Quality and Risk Management, Ernst & Young Transaction Advisory Services
Inhaltsverzeichnis zu „Cost of Capital “
- About the Authors- Acknowledgments
- Introduction
- Notation
Part I. Cost of Capital Basics
1. Defining Cost of Capital
2. Introduction to Cost of Capital Applications: Valuation and Project Selection
3. Net cash flow: The Preferred Measure of Return
4. Discounting versus Capitalizing
5. Relationship between Risk and Cost of Capital
6. Cost Components of a Company's Capital Structure
7. Weighted Average or Overall Cost of Capital
- Appendix 7.1. Iterative Process Using CAPM to Calculate the Cost of Equity component of the Weighted Average Cost of Capital - Constant Capital Structure
- Appendix 7.2. Iterative process using CAPM to calculate the cost of Equity component of the weighted average cost of capital - changing capital structure
Part II. Estimating the Cost of Equity Capital "As If Publicly Traded"
8. Equity Risk Premium
8.1 Appendix
9. Build-up models
10. Capital Asset Pricing Model (CAPM)
11. Proper Use of Beta
12. Criticisms of CAPM and Beta versus Other Risk Measures
13. Size Effect
14. Criticisms of Size Effect
14.1 Appendix
15. D&P Risk Study
16. Alternative models to the Build-Up and CAPM models Fama-French, APT, Market derived capital pricing model, Yield-Spread Model
17. DCF Method
18. Global Cost of Capital models
19. Using Morningstar/Ibbotson Associates Cost of Capital Data
Part III. Corporate Financial Officers - Using Cost of Capital Data
20. Capital Budgeting and Feasibility Studies
21. Cost of capital for divisions/reporting units
22. Cost of capital in valuing acquisition/merger
23. Cost of capital in transfer pricing
24. Cost of capital in Economic Value Added Financial Management System
Part IV. Cost of Capital for Closely-Held Entities
25. Handling the Discount for Lack of Marketability For Operating Businesses
26. The Private Company Discount
27. Pass-through Entities: Partnerships LLCs and S corps
27.1 Appendix
28.
... mehr
Private Investment Companies
29. Venture Capital Investments
Part V. Other Topics
30. Minority versus Control Implications of the Cost of Capital Data
31. How Cost of Capital Relates to Excess Earnings Method
32. Adjusting the discount rate to alternative economic Income Measures
33. Equivalence With Alternative Cash Flow Methods For Valuing Companies
34. Common Errors In Estimation and Use of Cost of Capital
35. Cost of Capital In the Courts
Part VI. Real Estate and Ad Valorem
36. Cost of Capital For Real Estate Investments
36.1 Appendix. Valuing Real Property
37. REITs
37.1 Appendix
38. Cost of capital in Ad Valorem Taxation
Part VII. Advice to Practitioners
39. Dealing with Cost of Capital Issues - Advice from the Authors
40. Cross Examining Experts On Cost of Capital
- Appendices
- Appendix A. Bibliography
- Appendix B. Data Sources
- Appendix C. International Glossary of Business Valuation Terms
- Appendix D. Roger Grabowski's Cost of Capital Section in Kohler Report
- Appendix E. Developing Cost of Capital (Capitalization Rates and Discount Rates) Using ValuSource Valuation Software
- Index
29. Venture Capital Investments
Part V. Other Topics
30. Minority versus Control Implications of the Cost of Capital Data
31. How Cost of Capital Relates to Excess Earnings Method
32. Adjusting the discount rate to alternative economic Income Measures
33. Equivalence With Alternative Cash Flow Methods For Valuing Companies
34. Common Errors In Estimation and Use of Cost of Capital
35. Cost of Capital In the Courts
Part VI. Real Estate and Ad Valorem
36. Cost of Capital For Real Estate Investments
36.1 Appendix. Valuing Real Property
37. REITs
37.1 Appendix
38. Cost of capital in Ad Valorem Taxation
Part VII. Advice to Practitioners
39. Dealing with Cost of Capital Issues - Advice from the Authors
40. Cross Examining Experts On Cost of Capital
- Appendices
- Appendix A. Bibliography
- Appendix B. Data Sources
- Appendix C. International Glossary of Business Valuation Terms
- Appendix D. Roger Grabowski's Cost of Capital Section in Kohler Report
- Appendix E. Developing Cost of Capital (Capitalization Rates and Discount Rates) Using ValuSource Valuation Software
- Index
... weniger
Autoren-Porträt von Shannon P. Pratt, Roger J. Grabowski
Shannon P. Pratt, CFA, FASA, MCBA, CM&AA, is the Chairman and CEO of Shannon Pratt Valuations, Inc., and is the founder and Editor Emeritus of Business Valuation Resources, LLC. He is the author or coauthor of several industry standards, including Valuing a Business: The Analysis and Appraisal of Closely Held Companies, Valuing Small Businesses and Professional Practices, The Market Approach to Valuing Businesses, Standards of Value, Business Valuation and Taxes, The Lawyer's Business Valuation Handbook, and Cost of Capital.Roger J. Grabowski is managing director of Duff & Phelps LLC. He has testified in court as an expert witness, including the Northern Trust case, the first U.S. Tax Court decision that adopted the discounted cash flow method to value the stock of a closely held business with the discount rate based on the capital asset pricing model. Roger coauthors the annual Duff & Phelps's Risk Premium Report. He is also the editor of Business Valuation Review.
Bibliographische Angaben
- Autoren: Shannon P. Pratt , Roger J. Grabowski
- 2008, 3rd ed., 448 Seiten, Maße: 18,5 x 25,8 cm, Gebunden, Englisch
- Verlag: Wiley & Sons
- ISBN-10: 0470171154
- ISBN-13: 9780470171158
Sprache:
Englisch
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