Estimated cost of borrowed capital for long-term planning in business valuation

This thesis is focused on the estimation of the costs of borrowing for valuation purposes. Itfurther develops the results of the dissertation thesis Podškubka (2012) and using statisticalmethods further elaborates the procedure of estimating the cost of borrowing derived fromcomparable companies. The thesis consists of the theoretical, statistical and empirical part. Inparticular, the theoretical part defines the foreign capital and its costs, summarises themethods that can be used to estimate these costs and defines factors that may havea significant impact on the result of such an estimate. The statistical part focuses on thedevelopment of a model of comparable enterprises for estimating the cost of borrowing usinga regression equation and at the same time tests the predictive ability of selected variables, themain emphasis is on the interest coverage ratio. In the empirical part, the results and thedifficulty of applying the individual methods are compared with each other. In some cases,the results of the individual methods are significantly different. The choice of the methoditself is therefore essential for a reasonable estimate. For this reason, two decision-makingschemes (short and long term) are presented in the last part of the thesis, which shouldsupport the choice of an adequate method.