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Unformatted text preview: Note, it is important that n and i match. If periods are expressed in terms of number of monthly payments, the interest rate must be monthly. A perpetuity is an annuity that continues forever of has no maturity. Growing perpetuity Level perpetuity: stay the same Higher risk, use higher discount rate NPV= -C0+C1/(1+R) IRR,set NPV=0 Bond Price= PV OF INTEREST PAYMENT AND PRINCIPAL OF FACE VALUE BOND YIELD=IRR of Bond The price of a stock is the present value of future stream of dividends High growth, stock price will be higher R is lower, the stock is not as risky as others, stock price will be higher. P5beyonds dividends 5 high growthhigh p/e multiple. high risklow p/e multiple. Don't use taining multiple...
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