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Varianz der Eigenkapitalkosten von Schweizer Aktiengesellschaften

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  • Andreas Jacobs
  • Pius Z'graggen

Abstract

The value of a project depends on its expected cash flows and the appropriate discount rate. Since discount rates are measured with historical data, their estimation is subject to measurement error. Measurement error can influence project decisions. This paper describes a method to gauge the variance of CAPM based cost of equity estimates and calculates it for a sample of 25 Swiss firms. The variances we obtain are fairly small. Nevertheless, even these small confidence intervals can lead to significant valuation differences.

Suggested Citation

  • Andreas Jacobs & Pius Z'graggen, 1996. "Varianz der Eigenkapitalkosten von Schweizer Aktiengesellschaften," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 132(I), pages 87-108, March.
    • Handle: RePEc:ses:arsjes:1996-i-4
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