Duff & Phelps Recommended U.S. Equity Risk Premium and Corresponding Risk-Free Rates to be Used in Computing Cost of Capital: January 2008 - Present

The Equity Risk Premium (ERP) is a key input used to calculate the cost of capital within the context of the Capital Asset Pricing Model (“CAPM”) and other models. Duff & Phelps regularly reviews fluctuations in global economic and financial market conditions that warrant a periodic reassessment of the ERP and the accompanying risk-free rate.  

Duff & Phelps has published its recommended U.S. ERP and corresponding risk-free rate since 2008. Download a table summarizing these recommendations over the period January 2008 – present.  

Historical recommendations:

• Duff & Phelps Recommended U.S. Equity Risk Premium Decreased from 6.0% to 5.5%, Effective December 9, 2020

• Duff & Phelps U.S. Normalized Risk-Free Rate Lowered from 3.0% to 2.5%, Effective June 30, 2020

• Duff & Phelps Recommended U.S. Equity Risk Premium Increased from 5.0% to 6.0% Effective March 25, 2020

• Duff & Phelps U.S. Equity Risk Premium Recommendation Decreases from 5.5% to 5.0%, Effective December 19, 2019

• Duff & Phelps Decreases U.S. Normalized Risk-Free Rate from 3.5% to 3.0%, Effective September 30, 2019  

• Duff & Phelps Increases Recommended U.S. Equity Risk Premium from 5.0% to 5.5%, effective December 19, 2018

• Duff & Phelps U.S. Equity Risk Premium Recommendation Decreases from 5.5% to 5.0%, Effective September 5, 2017

• Duff & Phelps Decreases U.S. Normalized Risk-Free Rate from 4.0% to 3.5%, Effective November 15, 2016

• Duff & Phelps Increases Recommended U.S. Equity Risk Premium from 5.0% to 5.5%, Effective January 31, 2016

• Brexit: The Impact on Cost of Capital (September 14, 2016)

• Duff & Phelps Decreases U.S. Equity Risk Premium Recommendation to 5.0%, Effective February 28, 2013

• Duff & Phelps Decreased Its Recommended U.S. Equity Risk Premium to 5.5% Effective January 15, 2012