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Quick way to determine Cost of Capital


Nishan04

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My first post...

 

Basically...I want to create a model where I know the ROE. Then, knowing the cost of capital would tell me what's really left for the company to add to book value. If I roughly know the cost of capital and tax rate on earnings, then I can extrapolate the growth of book value for say 10 years. That'd give me an idea of a fair value of the whole company...anytime the company's trading at a discount to that is my margin of safety...

 

So, how do you determine cost of capital from looking at financials / industry metrics?...I know there are theoretical ways to find cost of capital based on capital structure and calculations...

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