What a difference risk makes in cost of capital calculations
Mike Pellegrino (Pellegrino and Associates) offered attendees at his BVR teleconference on An IP Cost of Capital Estimation Model, August 20th a simple example of the impact success rate estimates have on cost of capital determinations for early stage products and companies. Pellegrino’s new model factors in observable market data for holding periods, success rates, [...]
IP Discount Rate Model—Looking Ahead
So why do the CAPM, build-up method, and similar models fall short when deriving a discount rate for IP projects? For starters, they “look backwards” by relying on historical information. It’s “like trying to drive a car forward by looking in the rearview mirror,” quipped Mike Pellegrino in BVR’s teleconference this afternoon -”IP Cost of [...]
Pellegrino: “Cost of Capital Models Inadequate”
According to Mike Pellegrino, author of BVR’s soon-to-be-released Guide to Valuing Intellectual Property, “existing methods for estimating the cost of capital for an IP project are inadequate.” Coming at the intersection of two challenging and robust fields – cost of capital (COC) and IP valuation – this bold statement calls into question many cost of [...]
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