The goal of this case study is to explore the complexities and relevance of accurately estimating the cost of capital, which serves as a reference for key decisions in corporate finance and equity valuation. Despite the simplicity of a company’s cost-of-capital formula, in practice, estimating the cost of capital is not simple because it requires substantial judgment, and alternative approaches exist. This prevents a straightforward method for calculating the cost of capital, leading to inaccuracies. This case study features an equity analyst reviewing survey-based studies on best practices for cost-of-capital estimation and gathering data to estimate and analyze the cost of capital for leading US grocery firms. A technical note on the cost of capital is appended to support the development and solution of the case. Broadly, this study highlights the lack of consensus among practitioners on several aspects of cost-of-capital estimation and underscores the importance of making informed judgments based on finance and economics principles.

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