Corporate Finance Partner

Dear Madam/Sir ......,

You receive this message because you are interested in company valuation. You bought F-Valuation Software or downloaded a demo version in the past. Herewith the latest news on the risk premium 2012.

Latest Risk Premium 2012 now available.
The disappointing long-term trends in stock markets, resulted as to 2012 in a slighly lower risk premium of 4,68% for the USA. As to 2011, the risk premium was still 4.98%. Both calculations are based on the maximum number of years since 1900 and using as method the unweighted average of all methods of calculation. For now comparative data from other sources are not yet available.

The 'risk free' US rate is also down to 2.78% end 2011, from 3.26% at the end of 2010. In total this gives actually about 7.46% remuneration for the equity component in company and other valuations. Very unusual currently other sources of business financing are hardly available and/or often more expensive (before tax). Therefore financial leverage has lost its capacity to lower the cost of equity.

In these circumstances, a WACC of around 7.46% is the result, or conversely, a theoretical Price/Earnings relation of almost 13,4. The actual average PE on most markets is much lower, the USA being more or less the exception. In the USA for example, the unweighted Dow Jones index at March 6 2012 gave a PE ratio of 12.90 based on estimated 2012 earnings. Under some assumptions, all US investors, pension- and investment funds should theoretically buy European shares now in countries with ample confidence in the viability of it's public debt.

A free demo can be downloaded from this website by clicking on the link: Free Software. The latest version 8 with the latest risk premiums can be purchased online with the link: Order Software.

Best Regards,

Finiconsult Ltd
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