1. finance

Market Results
Through December 2013
And Through March 2014
Introducing a new valuation data resource from
Duff & Phelps: International Cost of Capital
Release date: on or about December 29, 2014
2014
International Valuation Handbook
Guide to Cost of Capital
In December 2014, Duff & Phelps introduced a new cost of capital resource: the 2014 International
Valuation Handbook ‒ Guide to Cost of Capital. This new publication provides the same rigorous countrylevel cost of capital analysis previously published in the (now discontinued) Morningstar/Ibbotson®
“international” reports.
The 2014 International Valuation Handbook ‒ Guide to Cost of Capital provides country-level country risk
premia (CRPs) and country-level equity risk premia (ERPs) which can be used to estimate country-level
cost of equity capital globally, from the perspective of investors based in 55 different countries.
The new 2014 International Valuation Handbook ‒ Guide Cost of Capital is published with data through
December and March (depending on the model being presented), and will include an optional September
semi-annual update.
Duff & Phelps, LLC
311 South Wacker Drive
Suite 4200
Chicago, IL 60606
(312) 697-4600
www.duffandphelps.com
What’s Inside
Where do you get the data now?
1
Release dates
4
Setting a new standard in country-level analysis
6
Who should use
7
What’s included: equity risk premia (ERPs) and country-level country risk premia (CRPs)
8
What’s included in more detail: equity risk premia (ERPs)
9
What’s included in more detail: country-level country risk premia (CRPs)
10
Benchmark, supplement, and strengthen your custom analysis
13
Semi-annual update
14
Purchasing information
15
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
Where do you get the data now?
2014 Valuation Handbook ‒
Guide to Cost of Capital
Company-level Cost of Capital
2014 Valuation Handbook ‒
Industry Cost of Capital
Industry-level Cost of Capital
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
Country-level Equity Risk Premium (ERP)
Country-level Country Risk Premium (CRP)
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
1
Where do you get the data now?
Morningstar / Ibbotson®
SBBI® Valuation Yearbook
(discontinued)
2014 Valuation Handbook ‒
Guide to Cost of Capital
Company-level Cost of Capital
Morningstar / Ibbotson®
Cost of Capital Yearbook
(discontinued)
2014 Valuation Handbook ‒
Industry Cost of Capital
Industry-level Cost of Capital
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
2
Where do you get the data now?
Previously published in:

The Morningstar/Ibbotson International Cost of
Capital Report (discontinued)
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
Country-level Equity Risk Premium (ERP)

The Morningstar/Ibbotson International Cost of
Capital Perspectives Report (discontinued)

The Morningstar/Ibbotson International Equity
Risk Premia Report (discontinued)
Country-level Country Risk Premium (CRP)
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
3
Release dates
Release date: March 17, 2014
Release date: October 8, 2014
Duff & Phelps published the 2014 Valuation
Handbook – Guide to Cost of Capital
Duff & Phelps published the 2014 Valuation
Handbook – Industry Cost of Capital
This book provides key year-end data previously
published in:
This book provides the same type of rigorous
industry-level analysis previously published in:

The Morningstar/Ibbotson® SBBI® Valuation
Yearbook and

The Duff & Phelps Risk Premium Report.

The Morningstar/Ibbotson® Cost of
Capital Yearbook.
Company-level cost of capital
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
Industry-level cost of capital
4
Release dates
Release date: December 29, 2014*
Duff & Phelps introduces the new 2014
International Valuation Handbook – Guide to Cost
of Capital
This book provides the same type of rigorous
country-level analysis previously published in:

The Morningstar/Ibbotson International
Cost of Capital Report (discontinued)

The Morningstar/Ibbotson International
Cost of Capital Perspectives Report
(discontinued)

The Morningstar/Ibbotson International
Equity Risk Premia Report (discontinued)
(pre-order and receive a
special discount! See
purchasing information on
last page of this document)
Country-level Equity Risk Premium (ERP)
*Approximate
Country-level Country Risk Premium (CRP)
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
5
A new standard source of country-level
analysis
The new 2014 International Valuation
Handbook ‒ Guide to Cost of Capital:

Meets,

Builds on, and

Exceeds
the country-level data previously available in the
Morningstar/Ibbotson “international” cost of capital reports.
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
The 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
provides country-level country risk
premium for up to 179 countries globally,
from the perspective of investors based
in 55 different countries.*
*Depending on data availability; some countries may not include all data points.
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
6
Who should use

Traditional professional valuation analysts, valuing public
and private companies with operations located in multiples
countries.

Corporate finance officers when pricing or evaluating
proposed cross-border mergers and acquisitions (M&A), raising
private or public equity in different jurisdictions, and/or dealing
with cross-border stakeholder disputes.

Corporate officers when evaluating investments for capital
budgeting decisions in different countries.

Investment bankers when pricing initial (or follow-on) public
offerings, proposed M&A transactions, and private equity
financing for target entities located in a variety of countries.

Private equity investors when pricing or evaluating proposed
cross-border M&A transactions, making capital budgeting
decisions for entities located in different countries, or updating
quarterly valuations of portfolio companies with operations
located in foreign countries.

Real estate investors when pricing or evaluating proposed real
estate investments, or updating valuations of portfolio
companies with operations located in foreign countries.

CPAs and valuation professionals dealing with either
valuations for financial and tax reporting purposes, or with
dispute and bankruptcy valuations issues involving companies
with operations located in multiple countries.

Transfer pricing economists dealing with valuation and
transfer of intellectual property and other intangible assets
across jurisdictions.

Judges and attorneys dealing with valuation issues in M&A,
shareholder and partner disputes, damage cases, solvency
cases, bankruptcy reorganizations, regulatory rate setting,
transfer pricing, and financial reporting involving entities with
operations located in multiple jurisdictions.
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
7
What’s included: Equity risk premia (ERPs) and
Country-level country risk premia (CRPs)
The new 2014 International Valuation
Handbook ‒ Guide to Cost of Capital:
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital

Country-level equity risk premia (ERPs),
the ERP (often interchangeably referred to as the
market risk premium) is defined as the extra
return that investors expect to receive from a
diversified investment in equities (i.e., stocks) in
excess of a “risk-free” security (typically proxied
by a government bond of a “safe” country). The
ERP is one of the primary building blocks
employed in the estimation of cost of capital.

Country-level country risk premia (CRPs),
the incremental risk premium associated with
investing in another market other than the “home”
country.
The 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
provides country-level country risk
premium for up to 179 countries
globally, from the perspective of
investors based in 55 different
countries.*
*Depending on data availability; some countries may not include all data points.
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
8
What’s included in more detail: Equity risk
premia (ERPs)
Equity risk premia (ERPs) estimates
includes:
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital

Long-horizon and short-horizon ERP data in USD
and “local” currencies

ERP data previously available in the
Morningstar/Ibbotson “international” reports

Pablo Fernandez’ survey of ERPs used in 2014
for a variety of countries

And more.
The 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
provides long-horizon and short-horizon
ERP data for 18 countries based in
USD and “local” currency.
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
9
What’s included in more detail: Country-level
country risk premia (CRPs)
Country-level country risk (CRPs)
estimates:
Country risk premia (CRPs) are estimated using multiple
models, which are then employed in the calculation of the
statistics from the perspective of investors based in 55
different countries. The models applied in the new 2014
International Valuation Handbook ‒ Guide to Cost of Capital
include the following:
1) Country Credit Rating Model
2) Country Yield Spread Model
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
3) Relative Standard Deviation Model
The 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
provides country-level country risk
premium for up to 179 countries globally,
from the perspective of investors based
in 55 different countries.*
*Depending on data availability; some countries may not include all data points.
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
10
What’s included in more detail: Country-level
country risk premia (CRPs)
Country-level country risk (CRPs)
estimates:
Country Credit Rating Model estimates a country-level
country risk (CRPs) up to 179 countries globally, from
the perspective of investors based in 55 different
countries.*
Lowest CRP
Highest CRP
n/a
*Subject to change.
Investor Perspective
Argentina
Australia
Bahrain
Brazil
Canada
Chile
China
Colombia
Czech Republic
Denmark
Euro-zone Countries
Hong Kong
Hungary
Iceland
India
Indonesia
Japan
Korea (South)
Kuwait
Malaysia
Morocco
New Zealand
Norway
Philippines
Poland
Qatar
Russia
Saudi Arabia
Singapore
South Africa
Sweden
Switzerland
Taiwan
Thailand
United Arab Emirates
United Kingdom
United States
Uruguay
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
Currency
Argentine Peso
Australian Dollar
Bahraini Dollar
Brazilian Real
Canadian Dollar
Chilean Peso
Chinese Yuan Renminbi
Colombian Peso
Czech Koruna
Danish Krone
Euro
Hong Kong Dollar
Forint
Iceland Krona
Indian Rupee
Rupiah
Japanese Yen
South Korean Won
Kuwaiti Dinar
Malaysian Ringgit
Moroccan Dirham
New Zealand Dollar
Norwegian Krone
Philippine Peso
Zloty
Qatari Rial
Russian Ruble
Saudi Riyal
Singapore Dollar
South African Rand
Swedish Krona
Swiss Franc
New Taiwan Dollar
Thai Baht
UAE Dirham
Pound Sterling
United States dollar
Uruguayan Peso
11
What’s included in more detail: Country-level
country risk premia (CRPs)
Detailed summary country risk premium
statistics by:

NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
MSCI Market Classification

Developed

Emerging

Frontier

World Rank

Regional Rank

And more.
The 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
provides country-level country risk
premium for up to 179 countries globally,
from the perspective of investors based
in 55 different countries.*
*Depending on data availability; some countries may not include all data points.
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
12
Benchmark, supplement, and strengthen your
custom analysis
The detailed country analysis arms
valuation analysts with the ability to:

Benchmark,

Supplement, and

Strengthen
their own international cost of capital estimates.
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital
“I know how to value a company in the
United States, but this one is in Country
X, a developing economy. What should I
use for a discount rate?”
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
13
Semi-annual update
Hardcover book:
Data through
December 2013
and March 2014
Ensure that you are always using the
most up to date data ‒ add the semiannual update to your toolkit.
Like the previous Morningstar/Ibbotson International Cost of
Capital Report, the new Duff & Phelps 2014 International
Valuation Handbook – Guide to Cost of Capital is published
with data through March 2014, and includes the option of
adding the September semi-annual update.
NEW: 2014 International Valuation
Handbook ‒ Guide to Cost of Capital

The annual book is in hardcover format; the
September semi-annual update is delivered by email
in PDF format.

The country analysis in the September semi-annual
update includes an update of all of the information
found in the hardcover book.
Semi-annual Update
Data through
September 2014
+
* Update is optional (but recommended), and are not sold separately.
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
14
Purchasing information
The new hardcover 2014 International Valuation Handbook ‒ Guide to Cost of Capital ships on or
about December 29, 2014.
Just like the (now discontinued) Morningstar/Ibbotson International Cost of Capital Reports:

Is calculated using data through December 2013 and March 2014

Is available with optional September semi-annual update delivered via email as a PDF
The new 2014 International Valuation Handbook ‒ Guide to Cost of Capital can be purchased from
Business Valuation Resources (BVR).
The new 2014 International Valuation Handbook ‒ Guide to Cost of Capital is $395 (regular); the
September semi-annual update is an additional $175 (regular price).
Order before December 29th, 2014, and receive a pre-release
discount of $45 for the Handbook or a pre-release discount of $175
for the Handbook plus Semi-annual PDF update.*
To reserve your copy:
Click:
Pre-release order for Handbook: $350 (a $45 discount!)
Click:
Pre-release order for Handbook + Semi-annual PDF Update: $395 (a $175 discount – equivalent to
getting the Semi-Annual update for free!)
Or call:
Business Valuation Resources, LLC (BVR)
www.bvresources.com/costofcapital
1 (503) 291-7963 ext. 2
* The pre-release discount period has been extended to December 29, 2014.
NEW: 2014 International Valuation Handbook – Guide to Cost of Capital
15