The cost of capital is the risk-adjusted required return that investors demand to provide capital to a company, and it is often a required input to valuations, measuring economic profits and returns, and measuring economic damages, as well as a recurring issue in regulatory and rate-setting proceedings. Because relatively small differences in the discount rate can produce large differences in the results, the cost of capital is frequently a highly contested issue.
We have the expertise and experience to measure each component of the cost of capital and to assess the reasonableness of the inputs and assumptions underlying an opposing expert's analysis. We estimate the cost of equity based on facts and well-accepted financial theory and empirical evidence, and we test the sensitivity of our conclusions to reasonable alternatives. Our work is based on widely-accepted and standard methodologies, frameworks, and analyses and we have been engaged by both plaintiffs and defendants in a wide range of industries in such matters.