Praise for Fourth Edition of Cost of Capital Workbook andTechnical Supplement"Pratt and Grabowski went the extra mile to supplement theirmagnum opus by providing this Workbook and Technical Supplement. Asa finance professor for many years, I know from experience thatstudents and teachers really value supplements to textbooks. Itallows the teacher to help the student to review and apply what waspresented in the text, and the PowerPoints are a great service toteachers in course preparation. The website provides variousworksheets that show the inner workings of the models. Ienthusiastically recommend the Workbook and TechnicalSupplement to finance professors and teachers and theirstudents.Daniel L. McConaughy, PhD, ASA, Professor of FinanceCalifornia State University, Northridge, Valuation Services, CroweHorwath LLP"The Workbook and Technical Supplement provides adetailed tutorial on understanding and executing the theoreticalconcepts explained in the Fourth Edition. This supplement is threebooks in one. Part One is a step-by-step tutorial on estimatingcertain key components of the cost of equity capital. Part Twoprovides a bridge between the theory and some practicalapplications, such as estimating the cost of capital for realproperty. Parts Three and Four allow the readers to test theircomprehension of the concepts and identify areas for a review. Itis almost as good as having Professors Pratt and Grabowski lookingover your shoulder to ensure that one is both comprehending andcorrectly implementing the complex concepts.."Ashok Abbott, PhD, Associate Professor of FinanceCollege of Business & Economics, West Virginia University"This text provides the most comprehensive coverage of cost ofcapital issues that I have seen to date. Messrs. Pratt andGrabowski have created a very accessible and lucid treatment ofwhat most would consider an opaque subject. The FourthEdition is especially important for its new topics as well asexpanded coverage of concepts from earlier editions. Of particularinterest is the review of the extreme market conditions during the2008-2009 crisis and the effect that the unprecedentedvolatility had on traditional cost of capital models. For yearsPratt and Grabowski's research has informed the business valuationcurriculum of the American Society of Appraisers. This book will beadded to our reading list, and thousands of students worldwide willbenefit from the state?of?the?art content of the FourthEdition and the companion Workbook and TechnicalSupplement. Furthermore, Cost of Capital, Fourth Edition shouldbe a mandatory part of every valuation practitioner's library. Ifyou buy this book, you can expect it to become well worn and remainon your desk within arm's length until the publication of theFifth Edition."John Barton, ASA, CPA, Chairman, Business ValuationCommittee, ASA"Cost of capital is so much more complex than it used to be.With so many additional considerations regarding each variable ofthe cost of capital formula, this book is a must for anyone thatneeds to understand or develop a discount rate. Even the mostexperienced practitioner will benefit from the outstanding work ofPratt and Grabowski. This book has to become part of yourlibrary."Gary R. Trugman, CPA/ABV, MCBA, ASA, MVS, PresidentTrugman Valuation Associates, Inc.

Preface.About the Author.Acknowledgments.Notation System and Abbreviations Using in This Book.PART ONE: Technical Supplement--Supplements to Chaptersof Cost of Capital: Applications and Examples, 4th ed.CHAPTER 1: Alternative Net Cash FlowDefinitions--Supplement to Chapter 3.Introduction.Equity Cash Flow Method.Invested Capital Method.Capital Cash Flow Method.Adjusted Present Value Method.Residual Income Method.CHAPTER 2: Examples of Computing OLS Beta, Sum Beta, and FullInformation Beta Estimates--Supplement to Chapter 10.Introduction.Computing OLS and Sum Beta Estimates--An Example.Computing Full-Information Beta Estimate--An Example.CHAPTER 3: Estimating Beta: Interpreting RegressionStatistics--Supplement to Chapter 10.Introduction.Evaluating Beta Estimation Output.Evaluating Regression Output.CHAPTER 4: Example of Computing Downside BetaEstimates--Supplement to Chapter 12.Introduction.Computing Downside Beta Estimates.CHAPTER 5: Iterative Process Using CAPM to Calculate the Costof Equity Component of the Weighted Average Cost of Capital WhenCapital Structure Is Constant--Supplement to Chapter18.Introduction.Capital Asset Pricing Model and Beta.Solution: The Iterative Process.Iterative Process Using a Financial Spreadsheet Model.Summary.Additional Reading.CHAPTER 6: Iterative Process Using CAPM to Calculate the Costof Equity Component of the Weighted Average Cost of Capital WhenCapital Structure Is Changing--Supplement to Chapter18.Introduction.Assumptions Inherent in Weighted Average Cost of Capital.Solution: Iterative Process with Changing Capital Structure.Iterative Process Using Financial SpreadsheetModel.Equity Value.Summary.Additional Reading.CHAPTER 7: Cost of Capital and the Valuation of WorthlessStock--Supplement to Chapter 16.Introduction.Liquidating Value.Potential Value.Example.Possibility That Value of the Business Enterprise Exceeds theFace Value of Debt--Pricing Equity as a Call Option.Potential Future Value: Probability That Business EnterpriseExceeds Face Value of Debt.Additional Considerations.Summary.PART TWO: Technical Supplement--Specific Applications ofCost of Capital.CHAPTER 8: Cost of Capital of Private Investment CompanyInterests.Introduction.The Private Investment Company.Relationships between Time to a Liquidity Event and Value.Lack of Control.Lack of Marketability or Illiquidity.Example Valuation of PIC Interest.Summary.CHAPTER 9: Cost of Capital of Real Property--IndividualAssets.Introduction.Typical Structure of a Real Estate Transaction.Real Property Competes with Other Asset Classes.Direct Capitalization Method.Discounted Cash Flow Method.Estimating the Property Discount Rate.Summary.Appendix 9A: Valuing Real Property.CHAPTER 10: Cost of Capital of Real Estate Entities.Introduction.Definition of a Real Estate Entity.Measuring Net Cash Flow for Real Estate Entities.Valuation of Real Estate Entities.Summary.Additional Reading.Appendix 10A: Valuing Real Estate Entities.PART THREE: Learning Objectives, Questions, andProblems.PART FOUR: Answers and Solutions.Index.