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| visits | member for | 1 year |
| seen | Apr 25 '12 at 21:55 | |
| stats | profile views | 1 |
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Apr 25 |
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Calculate a discount rate given a PV at some point in the future I was referred here from CrossValidated due to the question concerning derivations of the present value equation. Is there a better forum? |
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Apr 25 |
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Calculate a discount rate given a PV at some point in the future Sorry, make that n[i] = (1-r)n[i-1] where n[i] is the number of subscribers in month i and n[i-1] is the number of subscribers in the previous month. How do you do subscripts here? |
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Apr 25 |
awarded | Editor |
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Apr 25 |
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Calculate a discount rate given a PV at some point in the future Got it, so the shape of the curve between the beginning and the end points looks just like if you plotted a present value on the y axis and the number of months on the x-axis. So plot y = 1 / (1+r)^x assuming some r. Not sure the technical name, sort of looks like an upside down log curve. The rate is constant (each months always has (1-r) fewer subscribers than the previous month) but the curve itself is not linear. |
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Apr 25 |
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Calculate a discount rate given a PV at some point in the future Clarifying that the cost of capital is assumed to be zero. |
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Apr 25 |
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Calculate a discount rate given a PV at some point in the future 3.24% is the arithmetic average (.78/24), but that doesn't work as a discount rate because the "curve" you propose 0.9675 >- 0.935 >- ... >- 0.22 is linear, but a "curve" from a discount rate is not. Since CLV is a summation of the area under the curve, using a linear curve will overestimate the value. Unless I'm mistaken? |
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Apr 25 |
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Calculate a discount rate given a PV at some point in the future I'm not sure I follow this. Can you say more about "how the attrition develops"? |
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Apr 25 |
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Calculate a discount rate given a PV at some point in the future True, the discount rate should include the cost of capital, but for this example I'm simplifying by assuming the cost of capital is zero, so as I understand it the subscription price (the monthly cash flow) is discounted by the "churn rate", because there are fewer and fewer subscribers from a given cohort remaining to pay the subscription price. |
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Apr 25 |
asked | Calculate a discount rate given a PV at some point in the future |
