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:

• Kroll Cost of Capital Inputs Updated to Reflect Heightened Uncertainty in Global Economy
• Kroll Cost of Capital Recommendations and Potential Upcoming Changes – March 2025
• Kroll Lowers its Recommended U.S. Equity Risk Premium to 5.0%, Effective June 5, 2024
• Kroll Cost of Capital Recommendations and Potential Upcoming Changes – February 8, 2024 Update
• 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 Yield Preferred When Higher

• Kroll U.S. Normalized Risk-free Rate Increased from 2.5% to 3.0%, Effective April 7, 2022

• Impact of the Russia-Ukraine Conflict on Cost of Capital Assumptions March 2022

• Duff & Phelps Recommended U.S. Equity Risk Premium Decreased from 6.0% to 5.5%, Effective December 9, 2020

• Duff & Phelps U.S. Normalized Risk-Free Rate Lowered from 3.0% to 2.5%, Effective June 30, 2020

• Duff & Phelps Recommended U.S. Equity Risk Premium Increased from 5.0% to 6.0% Effective March 25, 2020

• Duff & Phelps U.S. Equity Risk Premium Recommendation Decreases from 5.5% to 5.0%, Effective December 19, 2019

• Duff & Phelps Decreases U.S. Normalized Risk-Free Rate from 3.5% to 3.0%, Effective September 30, 2019  

• Duff & Phelps Increases Recommended U.S. Equity Risk Premium from 5.0% to 5.5%, effective December 19, 2018

• Duff & Phelps U.S. Equity Risk Premium Recommendation Decreases from 5.5% to 5.0%, Effective September 5, 2017

• Duff & Phelps Decreases U.S. Normalized Risk-Free Rate from 4.0% to 3.5%, Effective November 15, 2016

• Brexit: The Impact on Cost of Capital (September 14, 2016)

• Duff & Phelps Increases Recommended U.S. Equity Risk Premium from 5.0% to 5.5%, Effective January 31, 2016

• Duff & Phelps Decreases U.S. Equity Risk Premium Recommendation to 5.0%, Effective February 28, 2013

• Duff & Phelps Decreased Its Recommended U.S. Equity Risk Premium to 5.5% Effective January 15, 2012

• Duff & Phelps Increases U.S. Equity Risk Premium Estimate to 6.0%