The areas of focus included:

  • updating our estimates of beta and leverage to reflect more up-to-date information for comparable companies
  • the use of trailing averages as an alternative to prevailing rates when calculating the cost of debt
  • the use of annual indexation in updating the risk-free rate
  • compensating for efficiently incurred longer-term debt (including the appropriateness of the Term Credit Spread Differential)
  • the impact of the weighted average cost of capital (WACC) on incentives to apply for a customised price-quality path
  • using Black’s Simple Discount Rule as a potential cross-check for the Simplified Brennan-Lally Capital Asset Pricing Model (SBL-CAPM)
  • issues related to the airport WACC percentile.