Baird Investment Banking Pitch Book
1 AM COST OF EQUITY ANALYSIS
Cost of
Equity
Risk-free Interest Rate
(9)
Levered Beta
Market Premium (3)
Size Premium ¹)
Cost of Equity (5)
CAPM
3.3%
1.43
6.9%
0.9%
14.1%
Source: AM filings and Bloomberg.
Represents estimated 20-year treasury rate as of October 5, 2018.
(2) Represents two-year levered equity beta as of February 23, 2018, the date prior to the announcement of the Special Committee formation.
Large company stock total returns minus long-term government bond income returns as computed by Duff & Phelps LLC.
(3)
(4)
(5)
Confidential
Source: Duff & Phelps LLC size premium based on AM's equity market value as of October 5, 2018.
Cost of equity is calculated using CAPM (e.g. cost of equity risk-free interest rate + levered equity beta market risk premium + size premium).
BAIRD
As a result of its cost of equity analysis, Baird utilized a
range of 13.0% - 15.0% for purposes of its discounted
distribution analysis herein
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