In The Little Book of Valuation there is an example for how to calculate cost of equity. I couldn't get the same value that's in the book. Am I doing something wrong, or is this a typo?

3.72% (risk-free rate) + 1.29 (beta) * 4% (equity risk premium) = 9.16%

I want to make sure I understand how the 9.16% was derived, as I keep getting 8.88%.

Question

In The Little Book of Valuation there is an example for how to calculate cost of equity.  I couldn't get the same value that's in the book.  Am I doing something wrong, or is this a typo?

3.72% (risk-free rate) + 1.29 (beta) * 4% (equity risk premium) = 9.16%

I want to make sure I understand how the 9.16% was derived, as I keep getting 8.88%.

anonymous · Answer

Looks like your computation is right and I must have screwed up. Which chapter was this in?

anonymous · Answer

Thank you for your fast response, it was in Chapter 3, right after Table 3.3

anonymous · Answer

Thank you for your fast response, it was in Chapter 3, right after Table 3.3