If a firm is privately owned, and its stock is not traded in public markets, then we cannot measure its beta for use in the CAPM model, we cannot observe its stock price for use in the DCF model, and we don't know what the risk premium is for use in the bond-yield-plus-risk-premium method.All this makes it especially difficult to estimate the cost of equity for a private company.

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Quizplus · Accepted Answer

t, but data on comparable publicly owned firms can often be obtained and used as proxies for private firms.

If a Firm Is Privately Owned, and Its Stock Is