Valuation Question: best mkt return to calculate MRP
Monkeys,
I'm doing a practice DCF on my own and need to calculate the required return on equity. Checked out the journal and US 10 Years are hovering around 2.9%. What's a good market return rate to use (I'm valuing a specialty/discount retail chain) so I can calculate my MRP? Is a 10% expected market return about right for today's conditions? This would give me a 7.1% MRP, which I feel is way too high.
Is there a standard market return that you guys use to calculate MRP? I heard a 7% market return is a safe historical rate to use.
Anything helps.
Depending on the bank 4 to 6% MRP is pretty standard
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