Duff & Phelps Risk Premium Report Calculator > Frequently Asked Questions

What is the minimum number of Size Study inputs and Risk Study inputs?

For the Size Study, only 1 of the 8 inputs is required since they are independently calculated, but it is recommended that you use as many inputs as are available to you for best results.

For the Risk Study, no inputs are required (and the Risk Study will not be used). If you desire to use the Risk Study, a minimum of 3 years of financial data are required (5 years of data are recommended for best results).

The Calculator asks for some inputs in millions. What about for a smaller company with revenues of $500K—would I enter that as .5?

Yes – that is correct.

I am confused as to Size Study inputs and Risk Study inputs - are these from the Duff & Phelps study or are they the subject?

They are for the subject company. The Calculator uses the 8 alternative measures of size (or as many as are available for your subject company) for the Size Study, and the subject company accounting data entered for the Risk Study, to calculate COE for your subject company.

I see that the Risk Free Rate is automatically populated. Where does this information come from? Can I change it?

The Risk Free Rate information comes from the Federal Reserve and is the yield on a 20 year Treasury based on the valuation date you entered—it is automatically populated as a convenience to you, but you can change the number if you wish by typing over it. The Calculator will automatically populate the last closing yield prior to your valuation date unless changed.

How is Market Value of Common Equity determined without first having ERP?

There are up to 8 alternative size measures that can be used with any of the four methods of estimating COE provided by the Duff & Phelps Risk Premium Report's "Size Study". It is important to note that it would not be unusual for fewer than 8 of these measures to be available for any given subject company. For example, Market Value of Equity will probably not be available for a closely-held company, nor will Market Value of Invested Capital (in which Market Value of Equity is embedded). In cases where fewer than 8 size measures are available, it is generally acceptable to use the size measures that are available.

In the Risk Study inputs section, can I change the date for the most recent year?

You can enter whatever year you consider to be the "most recent year" relative to the valuation date.

Inputting Data