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Should Business Appraisers “Normalize” Long-Term Treasury Rates When Building Equity Discount Rates?

Some valuation practitioners use a normalized risk-free rate in determining the cost of capital.  This can inflate the cost of equity by up to a couple of percentage points, which in turn depresses valuation multiples.  Is normalizing the risk-free rate a rational, reasonable practice?  In today’s guest post, Chris Mercer suggests the answer is an emphatic no. To read the full article in Mercer Capital's Fi ...

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