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A Consistent Methodology for the Calculation of the Cost of Capital in Emerging Markets

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Abstract:

This article presents in a rigorous manner a methodological approach for the calculation of the discount rate in emerging markets. This calculation requires a robust estimation of country risk. In addition, it requires to identify explicitly and rigorously the academic relationship between the WACC (Weighted Average Cost of Capital) methodology and the CAPM (Capital Asset Pricing Model). Finally, is demonstrated that by being consistent with the assumptions, the outcome of the discount rate calculation by the two previous alternatives must be consistent.

Tópico:

Financial Markets and Investment Strategies

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Citations: 9
9

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Información de la Fuente:

FuenteSSRN Electronic Journal
Cuartil año de publicaciónNo disponible
VolumenNo disponible
IssueNo disponible
PáginasNo disponible
pISSNNo disponible
ISSN1556-5068

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