Startup Valuation MCP Server

CAPM & Cost of Equity

valuation_capm

Read-onlyIdempotent

Estimate the cost of capital: standard CAPM, startup-adjusted CAPM with size and illiquidity premiums, portfolio beta from weighted asset betas, and WACC blending after-tax cost of equity and debt. Method selects the formula. Use to derive the discount rate that feeds valuation_time_value and DCF models; for cross-border rates add valuation_international. Parameters apply per method: capm needs risk_free_rate + beta + market_return; startup_capm adds size_premium and liquidity_premium; portfolio_beta needs weights + betas, which must be equal length; wacc needs equity_value + debt_value + cost_of_equity + cost_of_debt + tax_rate. Only method is required; all other parameters are method-dependent, so supply those the selected method names and omit the rest (defaults apply where defined). Rate and decimal inputs are fractions (0.10 = 10%); probability and weight lists are in [0,1] and sum to 1. Returns value, method, inputs, assumptions, chapter, formula_number and calculation steps; pure arithmetic — no I/O and no external calls — rounded to 2 decimals, with no auth or rate limits. An unknown method, or a missing method-required parameter, returns an error instead of a value.

Input Schema

TableJSON Schema

Name	Required	Description
`beta`	No	Systematic risk beta (market = 1.0).
`betas`	No	Asset betas aligned with weights; typically 0.5–3.0 (market = 1.0).
`method`	Yes	Formula to apply. Options: capm = E(R) = Rf + β·(E(Rm) - Rf).; startup_capm = r = Rf + β·MRP + size premium + illiquidity premium.; portfolio_beta = βp = Σ wᵢ·βᵢ.; wacc = WACC = (E/V)·Re + (D/V)·Rd·(1 − T).
`weights`	No	Portfolio or factor weights, each in [0,1] and summing to 1 (same order as the paired value list).
`tax_rate`	No	Effective tax rate as a decimal in [0,1].
`debt_value`	No	Market value of debt, in currency units.
`cost_of_debt`	No	Pre-tax cost of debt Rd as a decimal.
`equity_value`	No	Value of equity offered, currency units.
`size_premium`	No	Small-cap / size premium as a decimal.
`market_return`	No	Expected market return as a decimal (e.g. 0.10 for 10%).
`cost_of_equity`	No	After-tax cost of equity Re as a decimal.
`risk_free_rate`	No	Risk-free rate as a decimal (e.g. 0.04 for 4%).
`liquidity_premium`	No	Illiquidity premium as a decimal.
`market_risk_premium`	No	Market risk premium as a decimal (e.g. 0.06).

Output Schema

TableJSON Schema

Name	Required	Description
`error`	No	Error message when the call fails.
`steps`	No	Intermediate steps for traceability.
`value`	Yes	Computed valuation or metric.
`inputs`	No	Echo of the normalised inputs used.
`method`	No	Formula / method name that produced the result.
`chapter`	No	Source textbook chapter.
`assumptions`	No	Modelling assumptions applied.
`formula_number`	No	Source textbook formula number (e.g. '3.1').
`defaults_applied`	No	Optional parameters that were not supplied, so their documented defaults were used.

Schema Changelog

Changes observed during successful MCP inspections.

First observedOct 3, 2026

TDQS

A4.8/5.0

Behavior5/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Annotations already cover read-only/idempotent/non-destructive, and the description adds materially more: pure arithmetic with no I/O or external calls, rounding to 2 decimals, no auth or rate limits, and error behavior for unknown methods or missing required parameters. That is exactly the operational context an agent needs to call it confidently.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness4/5

Is the description appropriately sized, front-loaded, and free of redundancy?

Dense but front-loaded: purpose first, then when-to-use, then per-method parameter requirements and conventions. Given four distinct methods and 14 parameters, the length is largely earned, though the run-on method-parameter sentence could be tightened.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

Complete for a 14-parameter, 4-method tool: method routing, required vs optional parameters, defaults, input conventions, return fields, determinism, and error cases are all stated. The output schema exists, so return-shape detail in the description is appropriately brief.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters4/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so the baseline is 3, but the description goes beyond by mapping each method to its required parameters, noting beta/weights lists must be equal length, stating that only method is required and others are method-dependent, and fixing the fraction conventions (0.10 = 10%, weights in [0,1] summing to 1). This adds real value over the schema.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

States a specific verb (estimate) and resource (cost of capital) and enumerates the four methods (standard CAPM, startup-adjusted CAPM, portfolio beta, WACC) so an agent can distinguish it from valuation_international and other siblings. The scope is unambiguous before any schema is opened.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines5/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

Explicitly says when to use it ('derive the discount rate that feeds valuation_time_value and DCF models') and names the alternative/complement ('for cross-border rates add valuation_international'). Method selection is routed by name rather than left to inference.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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