This Finance survey examines (a) Despite the empirical failures of the Capital Asset Pricing Model (CAPM) in explaining expected stock returns, a shareholder-value maximizing publicly-traded firm should still use the CAPM to calculate the cost of equity in capital budgeting; (b) The equity risk premium that U.S. publicly traded firms should use in cost of equity calculations in April 2023 is above 6%
Keyword: capital budgeting
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