A New And Better Way To Measure The Cost Of Equity Capital For Small Closely Held Firms

Abstract

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: &quot;Times New Roman&quot;,&quot;serif&quot;; font-size: 10pt;">The purpose of this paper is to explore the theoretical structure that underlies the valuation process for small closely held firms.<span style="mso-spacerun: yes;">&nbsp; </span>Specifically, cost of capital estimate methods which appear in the current literature are examined, and a theoretically correct and simple method to measure cost of equity capital for privately held companies is offered.<span style="mso-spacerun: yes;">&nbsp; </span></span></p>