Kroll Lowers Its Recommended U.S. Equity Risk Premium to 5.5% Impact of High Inflation and Market Volatility on Cost of Capital Assumptions, Effective October 18, 2022 Kroll Increases U.S. Normalized Risk-Free Rate from 3.0% to 3.5%, but Spot 20-Year U.S. Treasury...
Kroll regularly reviews fluctuations in global economic and financial market conditions that warrant a periodic reassessment of the ERP and the accompanying risk-free rate.
The Equity Risk Premium (ERP) is a key input used to calculate the cost of capital within the context of the Capital Asset Pricing Model (CAPM) (and other models).1The ERP is used as a building block when estimating the cost of capital (i....