Coming to terms with the cost of capital

Description

Abstract: Small differences in the cost of capital between opposing experts can have a disproportionately big effect on business value. But the cost of capital can be one of the most difficult ingredients of business valuation for judges, jurors, attorneys and business owners to understand. This article provides a framework for understanding how the cost of capital functions in business valuation. The article explains when appraisers use the cost of capital and how they ascertain which type is appropriate in a particular situation.