The overall cost of capital remains stable
Our latest update on how to assess your discount rates identified that:
⬧ Market indices have fallen due to a combination of lower growth expectations and a higher implied equity market risk premium, offset to some extent by a lower risk free rate.
⬧ With a higher market risk premium, the cost of capital for companies in lower beta industries will decrease whereas discount rates for higher beta companies will increase.
⬧ Credit spreads have widened with the overall cost of borrowing increasing (for large businesses in particular).
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If you would like to discuss discount rates, impairment, or any other valuation related matter, please feel free to contact us.
The Leadenhall Team
