The Lawyer's Guide to the Cost of Capital

Shannon Pratt, CFA, ARM, ABAR, FASA, MCBA, is a well-known authority in the field of business valuation and has written numerous books that articulate many of the concepts used in modern business valuation around the world. He is chairman and CEO of Shannon Pratt Valuations, Inc., in Portland, Oregon. Roger Grabowski, FASA, is a managing director of Duff & Phelps LLC in their Chicago, Illinois, office. He has directed valuations of business, partial interests in businesses, intellectual property, intangible assets, real property, and machinery and equipment for various purposes, including tax (income and ad valorem) and financial reporting, mergers and acquisitions, formation of joint ventures, divestitures, and financing.

Table of Contents Foreword: Cost of Capital Foreword: Family Law Perspective Foreword: Insolvency Perspective Table of Abbreviations Part 1-Cost of Capital Basics Chapter 1 Defining Cost of Capital Chapter 2 Valuing Equity Versus Invested Capital Chapter 3 Net Cash Flow: The Preferred Measure of Economic Income Chapter 4 Discounting Versus Capitalizing Chapter 5 Estimating the Cost of Equity Capital Chapter 6 Components of Cost of Equity Capital Chapter 7 Adjusting a Discount or Capitalization Rate for Other Measures of Economic Income Chapter 8 Overall (Weighted Average) Cost of Capital Chapter 9 How Cost of Capital Relates to the Excess Earnings Method of Valuation Chapter 10 Handling Discounts for Lack of Marketability and Liquidity Part II-Cost of a Capital in Specific Contexts Chapter 11 Cost of Capital in Estate and Gift Tax Matters Chapter 12 Cost of Capital Considerations in Corporate Restructuring and Other Federal Tax Matters Chapter 13 Cost of Capital Included in Damage Claims for Lost Profits Chapter 14 Cost of Capital in Intellectual Property Disputes Chapter 15 Cost of Capital in Bankruptcy Chapter 16 Cost of Capital in Appraisal and Fairness Cases Chapter 17 Cost of Capital in Family Law Matters Chapter 18 Cost of Capital in Ad Valorem Taxation Chapter 19 Cost of Capital in Regulated Industries PART III-Evaluating Experts Chapter 20 Common Errors in Applying Cost of Capital Chapter 21 Questions to Ask Business Valuation Experts Appendix I: Bibliography Appendix II: International Glossary of Business Valuation Terms