How to Calculate Cost of Equity for Discount Rates

Select Valuation Methods 

 

Select Income Approach 

Select Calculate Discount Rate 

Select Step 1: Method(s) for Calculating Cost of Equity 

Choose any of the following: CAPM, Build-Up or Duff & Phelps 

Option 1 – CAPM – Capital Asset Pricing Model 

Select Risk-Free Rate 

SVS provides updated 10- and 20-year Treasury Bond rates, in addition to 30-day Treasury Bill.  

Enter values for Equity Risk Premium, Beta, Size Premium, Company Specific Risk Premium, and Required Return on Security 

Note - line-specific and general commentary boxes are available and pull into final report. 

 

Option 2 – Build-Up Method 

Select Risk-Free Rate 

SVS provides updated 10- and 20-year Treasury Bond rates, in addition to 30-day Treasury Bill. 

Enter values for Equity Risk Premium, Size Premium, Industry Specific Risk Premium, Company Specific Risk Premium, and Required Return on Security 

Option 3 – Duff & Phelps 

***Usage of the Duff & Phelps option requires a subscription to their service and is not included in the SVS license*** 

Select Risk-Free Rate 

SVS provides updated 10- and 20-year Treasury Bond rates, in addition to 30-day Treasury Bill. 

Enter Portfolio Rank 

Enter Smoothed Risk Premium 

Enter optional Additional Risk Premium 

Weight your Cost of Equity calculations in Step 4: Choose Method(s) for Calculating the Discount Rate 

Select Save or Finish