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Cost of Capital

The Brattle Group has developed innovative methods to estimate the cost of capital at a line-of-business level for companies considering vertical disintegration, for firms entering foreign markets, and for companies facing radical changes to their cost structure. These techniques supplement traditional measures (such as DCF or CAPM) with structured models of risk and careful analogies to other industries or time frames.

We frequently provide expert testimony before regulatory bodies, courts, and arbitration panels regarding appropriate cost of capital, allowed rate of return, and discount rate.

Representative Engagements

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Related Experts

Principals:
Dan Harris
A. Lawrence Kolbe
Carlos Lapuerta
Michael J. Vilbert
Bente Villadsen

Senior Associates:
Toby Brown

Selected Publications

Cost of Capital Brochure
Measuring Return on Equity Correctly: Why current estimation models set allowed ROE too low
The Effect of Debt on the Cost of Equity in a Regulatory Setting
Current Issues in Cost of Capital
Current Issues in the Application of the CAPM to Rate Regulation
The Cost of Capital for the Nor-Ned Cable
Issues for Cost of Capital Estimation
21st Century ROEs: What Is Reasonable?
Cost of Capital Estimation for Unregulated Generation: Methodology and Estimates
The Impact of Stranded-Cost Risk on Required Rates of Return for Electric Utilities: Theory and an Example
Impact of Deregulation on Capital Costs: Case Studies of Telecommunications and Natural Gas
Compensation for the Risk of Stranded Costs
It Ain't In There: The Cost of Capital Does Not Compensate for Stranded-Cost Risk
Financial and Discount Rate Issues for Strategic Management of Environmental Costs
Discounted Cash Flow Estimates of the Cost of Equity Capital