Tue, Oct 18, 2022
Kroll Recommended U.S. Equity Risk Premium and Corresponding Risk-Free Rates to be Used in Computing Cost of Capital: January 2008 - Present
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. 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.
Duff & Phelps (Rebranded as Kroll) has published its recommended U.S. ERP and corresponding risk-free rate since 2008. Download a table summarizing these recommendations over the period January 2008 – present.
Historical recommendations:
- Impact of High Inflation and Market Volatility on Cost of Capital Assumptions, Effective October 18, 2022
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Kroll U.S. Normalized Risk-free Rate Increased from 2.5% to 3.0%, Effective April 7, 2022
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Duff & Phelps U.S. Normalized Risk-Free Rate Lowered from 3.0% to 2.5%, Effective June 30, 2020
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Duff & Phelps U.S. Equity Risk Premium Recommendation Decreases from 5.5% to 5.0%, Effective December 19, 2019
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Duff & Phelps Decreases U.S. Normalized Risk-Free Rate from 3.5% to 3.0%, Effective September 30, 2019
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Duff & Phelps Increases Recommended U.S. Equity Risk Premium from 5.0% to 5.5%, effective December 19, 2018
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Duff & Phelps Decreases U.S. Equity Risk Premium Recommendation to 5.0%, Effective February 28, 2013
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Duff & Phelps Decreased Its Recommended U.S. Equity Risk Premium to 5.5% Effective January 15, 2012
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