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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. […]