RT Report T1 Simultaneous determination of market value and risk premium in the valuation of firms A1 Lutz, Stefan AB Valuing a firm using the discounted cash flow method (DCF) requires the joint determination of the market value of its equity (MVE) together with the equity risk premium (ERP) the firm should earn, since the latter is part of the discount rate used in the calculation of the MVE.This paper presents a theoretical derivation of how MVE and ERP can be calculated simultaneously under fairly general conditions. Besides firm data on free cash flow to equitythe only external data needed are the risk-free rate of interest and a parameter indicating the required market risk premium per return volatility. YR 2012 FD 2012-11 LK https://hdl.handle.net/20.500.14352/49121 UL https://hdl.handle.net/20.500.14352/49121 LA eng NO JEL classification: G1, G3, M4 DS Docta Complutense RD 9 jul 2025