Simultaneous Determination of Market Value and Risk Premium in the Valuation of Firms

Valuing a firm using the discounted cash flow method (DCF) requires the joint determination of the market value of its equity (MVE) together with the equity risk premium (ERP) the firm should earn, since the latter is part of the discount rate used in the calculation of the MVE. This paper presents a theoretical derivation of how MVE and ERP can be calculated simultaneously under fairly general conditions. Besides firm data on free cash flow to equity the only external data needed are the risk-free rate of interest and a parameter indicating the required market risk premium per return volatility

MoreLess

Year of publication:	2020
Authors:	Lutz, Stefan
Publisher:	[2020]: [S.l.] : SSRN
Subject:	Risikoprämie \| Risk premium \| Theorie \| Theory \| Marktwert \| Market value \| Unternehmenswert \| Firm value \| Börsenkurs \| Share price \| Unternehmensbewertung \| Firm valuation \| CAPM

freely available

Full text |

More access options

doi.org

Check Google Scholar

In German libraries (KVK)

I need help

Extent:	1 Online-Ressource (7 p)
Type of publication:	Book / Working Paper
Language:	English
Notes:	In: International Business Research In: Vol. 5, No. 12 In: 2012 ISSN 1913-9004 E-ISSN 1913-9012 Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 26, 2012 erstellt
Other identifiers:	10.2139/ssrn.1942845 [DOI]
Classification:	G1 - General Financial Markets ; G3 - Corporate Finance and Governance ; M4 - Accounting and Auditing
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10012857380