| Autor: Katarzyna Byrka-Kita | 165 |
Strony: 165-175
pełen tekst
Summary
From the analysts’ of investors’ point of view the model for the cost of equity estimation should be widely accepted, accurate, easy to use and should generate the results which are relatively stable. With reference to these criterions build-up approach meets two of them – it is widely accepted method and its application is relatively simple. At the same time build-up approach fails as far as stability and accuracy is concerned and furthermore is criticized regardless which variant is applied. Academics emphasize that from the theoretical point of view it does not produce a self-contained whole and it can’t be treated as a general rule. As a result there are huge differences in estimates obtained in this way. However it should be emphasized that all of the models are just a simplification of the reality. Nevertheless the build-up approach should be applied in case of small firms which are not publicity traded.
pełen tekstBUILD-UP APPROACH AS AN ALTERNATIVE METHOD OF COST OF CAPITAL VALUATION
Summary
From the analysts’ of investors’ point of view the model for the cost of equity estimation should be widely accepted, accurate, easy to use and should generate the results which are relatively stable. With reference to these criterions build-up approach meets two of them – it is widely accepted method and its application is relatively simple. At the same time build-up approach fails as far as stability and accuracy is concerned and furthermore is criticized regardless which variant is applied. Academics emphasize that from the theoretical point of view it does not produce a self-contained whole and it can’t be treated as a general rule. As a result there are huge differences in estimates obtained in this way. However it should be emphasized that all of the models are just a simplification of the reality. Nevertheless the build-up approach should be applied in case of small firms which are not publicity traded.