Cost-of-Capital-Method-Components-Risk-Free-Rate-&-Equity-Risk-Premium

Cost of Capital Method Components: Risk-Free Rate & Equity Risk Premium

Introduction A reasonable cost of capital calculation hinges on accurately assigning a risk-free rate and equity risk premium to the model. While both are less prone to analyst-specific subjective criteria, there is still nuance to each. Both are moving targets, and analysts must weigh variables feeding the components closely to determine the most accurate estimate. […]

Cost of Capital Methods

Introduction Calculating the cost of capital is a critical step to come up with an accurate valuation, but many analysts and investors find the process daunting. As much art as science, there are multiple ways to calculate the cost of capital and just as many discrete variables that comprise the calculations themselves. These variables, in […]

How Do I Value My Business?

How do I Value My Business?

How do I Value My Business? Within industry-accepted frameworks, there are three main valuation approaches, with each approach having various valuation methodologies within it. We’ll keep this article simple, while giving you the insight into how you can view your business in relation to the valuation process. For the most complete and robust valuation process, […]

Enterprise Value

This post will take a dive into the enterprise value concept—an important concept in private business valuations.  As its name suggests, enterprise value (EV) is the measure of a company’s total value. It includes all asset claims and ownership interests from both debt and equity holders, thus enabling an investor to compare companies with different […]

market-approach

Market Approach

What Is the Market Approach Valuation?  The market approach valuation is one of the three approaches to value a business, along with the cost approach and income approach. In simpler terms, the market approach determines the value of a business based on the price of transfer or the value of comparable businesses (or even the same business). This valuation […]