Cost of capital

Analysis of the ever-changing price of money

Stock prices fell last fortnight. The S&P 500 index of big American companies dropped 1.8% to 5,161, and earnings per share rose by 20c. The S&P 500 offers a 9.1% annual expected return at the current price.

According to 𝑉𝑎𝑙𝑢𝑎𝑏𝑙's discounted cash flow model, the S&P 500 is estimated to be worth $4,662 per share. This model, which relies on analyst…