FVC2048. Cost of Capital in Turbulent Times

Estimating the cost of capital during the Covid-19 pandemic is challenging. We will examine what was "known and knowable" at various dates, the impact on the economy due to the pandemic, the shut-down and the reopening, the impact of actions by the Federal Reserve on the risk-free rate, and the changing risks that need to be reflected in the equity risk premium. We will also examine how to use the DCF method of valuation and what might be long-term growth once we return to "normal".

Learning Objectives:

• Discuss factors to consider in estimating the cost of capital during a turbulent economy
• Identify expected changes in economic growth during and after the pandemic