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A share is worth the sum of all its prospective dividend payments, discounted back to their net present value.
Many of the 50 states have unfunded pension liabilities bigger than their straight long-term debt loads when discounted back to a single figure, according to a report from Moody's Investors Service.
The value of a share is the sum of its future cashflows, discounted back to the present day; as rates fall, the discount rate declines, so the present value must rise.Rather than get bogged down in the theory straight away, let us start with the practice.
The resulting hypothetical earnings are discounted back into today's dollars and called profit.
Earnings gains were discounted back to 1996 using a rate tied to money market yields.
This represents the entitlement burden for the next 75 years, discounted back to 2004 dollars.
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Applying a 30 times forward multiple, and then discounting back five years at a 15 per cent discount rate yields a stock price of about $200.
A feasibility study of a new plant or even of a revamped one bases the forecast of incomes and outcomes on a discounting back approach.
A feasibility study of a new plant or even of a revamped one bases the forecast for incomes and outcomes on a discounting back approach.
"But it's not as straightforward as that because then you have to discount back to the present, because owing to inflation, £1 is worth less in the future than it is now," he said.
LONDON — Greece, on the verge of completing a crucial plan to reduce its debt burden, extended the deadline on Monday for foreign investors and Greek banks to sell their deeply discounted bonds back to the government.
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