Andrew Stolz

AUGUST 5, 2020

Investments are exposed to two types of risk: systematic and unsystematic. Systematic risks are uncontrollable market risks due to unavoidable external factors. Systematic risks include interest rates, economic fluctuations, political unrest, pandemics, etc. How Do You Calculate the Capital Asset Pricing Model?

Risk-free Rate 52

Risk-free Rate Beta Weighted Average Cost of Capital Risk Premium 52

Valutico

FEBRUARY 27, 2024

In DCF analysis, the Weighted Average Cost of Capital (WACC), representing the average return required by all stakeholders, is commonly used as the discount rate. The discount rate must be carefully chosen to reflect unique company risks and characteristics, and also changes in economic conditions.

Discounted Cash Flow 52

Discounted Cash Flow Risk Premium Risk-free Rate Beta 52

Equidam

APRIL 26, 2025

Discount Rate (Cost of Equity): The rate used to discount future cash flows reflects the riskiness of the investment. We calculate the cost of equity using the Capital Asset Pricing Model (CAPM). This incorporates the risk-free rate, a market risk premium specific to the company’s country, and Beta ($beta$).

Discounted Cash Flow 59

Discounted Cash Flow Terminal Value Book Value Beta 59