1.5.1 Asset Values (Prices)
Asset values are computed using the discounted cash flow approach and the following inputs:
A forecast of the future payouts to the owners of the asset (dividends and shareholder loan repayments and interest, or senior debt service)
A term structure of risk-free rates in the relevant market on the valuation date (quarter- or month-end) and at the relevant horizon (duration)
An equity risk premia or debt credit spread
As long as sufficient information about the expected cash flows to equity or debt holders can be obtained or estimated, at any time we have:
for primary or secondary investment in asset , paying until time . is the discount rates that the infrastructure company should be discounted at for time.
Here, which is is a combination of the term structure of risk-free rates in each period until investment horizon and the risk premia estimated for asset .
As described here, is a company specific risk-premia, computed as the combination of asset 's risk factor exposures at the time of valuation or and the market price of each risk factor estimated from observable market prices.