Multicriteria Estimated Cost of Equity Capital

The estimation of the cost of equity capital is a key input to the capital budgeting process when the firm uses internal financing. Financial analyst and managers usually utilize the CAPM to estimate the cost of equity which requires both measurement of the market risk premium and estimation of beta. For publicly traded firms, calculating the cost of equity is entirely based on information from the financial markets. Non traded firms and small businesses do not have sufficient market based information. This article proposes a multicriteria model to determine the cost of equity for non traded firms. The Analytic Hierarchy Process developed by Thomas Saaty is the proposed methodology for deriving relative priorities of tangible and intangible corporate risk factors. The model requires business managers to identify the relevant information sources for the required input data. The inconsistencies checking mechanism within the AHP model allows management to identify inconsistencies, to revise prior judgments and to synthesize coherently.

• Autores: Juan Carlos Gutiérrez Betancur
• Fecha de publicación: 2019
• Institución: Universidad EAFIT
• Repositorio: Repositorio EAFIT
• Idioma: spa
• OAI Identifier: oai:repository.eafit.edu.co:10784/14015
• Acceso en línea: http://hdl.handle.net/10784/14015
• Palabra clave: Financial Decision Making; Analytic Hierarchy Process (AHP); Cost of Equity; Non Traded Firms; Market Risk Premium; Beta; Business Risk; Private Risk; Neural Firings; Valuation.; Toma de Decisiones Financieras; Proceso Analítico de Jerarquías; Costo del Capital Propio; Empresas No Transadas en Bolsa; Beta; Riesgo de Negocio; Riesgo Privado; Impulsos Neuronales; Valoración.
• License: Copyright © 2009 Juan Carlos Gutiérrez Betancur