Using the build-up method and assuming that no adjustment for industry risk is required, calculate an equity

Question:

Using the build-up method and assuming that no adjustment for industry risk is required, calculate an equity discount rate for a small company, given the following information:

Equity risk premium = 5.0 percent
Mid-cap equity risk premium = 3.5 percent
Small stock risk premium = 4.2 percent
Income return on long-term bonds = 5.1 percent
Total return on intermediate-term bonds = 5.3 percent
Company-specific risk premium = 3.0 percent
20-year Treasury bond yield as of the valuation date = 4.5 percent

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...

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