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 rate that the infrastructure company should be discounted at for time .

Here,  which 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,  is a company-specific risk-premia, computed as the combination of asset i's risk factor exposures at the time of valuation orand the market price of each risk factorestimated from observable market prices.