2
votes
Accepted
Possible to use diffusion equation(s) to price derivatives with non-zero boundary conditions?
Assuming you mean $P_t=S_T$, that you are pricing under the risk neutral measure $\mathbb{Q}$ and introducing a discount factor $e^{-\int_0^T{r(t)dt}}$, your equation can be rewritten $-$ where $\{\...
- 7,091
2
votes
Find out the effective monthly discount rate for a 10% annual discount rate
I think that what you want is to convert an annually compounded interest rate to a monthly compounded interest rate, right?
$$\left(1+\frac{r_{monthly}}{12}\right)^{12} = (1 + r_{annual})$$
$$r_{...
- 5,285
2
votes
Accepted
How to handle cash from financing in a DCF model?
Lucky for us, the method you’re describing is unnecessarily complicated. M&M state that distributions have no impact on firm value, so why would it in your model?
Check out Valuation Models: An ...
- 805
2
votes
Are Accounts Receivable and Accounts Payable already included in revenue?
Your understanding of the mechanics of the construction of a cash flow statement is correct.
The cash flow statement, which operating cash flow is part of, is a reconciliation of net profit from the ...
- 476
1
vote
Are Accounts Receivable and Accounts Payable already included in revenue?
The way accounting is done for these might help:
When you sell something:
DR Accts Receivable, CR Revenue
So you have added to Revenue and therefore net income, but you did not get any cash. You got ...
- 421
1
vote
Accepted
Fixed Rate Bond Pricing using QuantLib Python
Starting the zero curve from a date 6 months in the past with respect to the valuation date throws the bond off. If you start the curve at valuationDate instead, ...
- 5,543
1
vote
Which Risk Free rate to use?
The choice of discount rate should be linked to the payment dates of your cash flows. For cashflows in the near future, use the 3-month T-Bill rates, but for those in 10 years you should use 10-year T-...
- 2,059
1
vote
Complicated DCF valuation
https://www.10xebitda.com/hedge-fund-presentations/ - HF decks on stocks they invested in. I'd guess you can find some DCF models or 'more complex models' for valuation in some of these. HTH.
- 2,076
1
vote
DCF Valuation Models
There's plenty of resources on the internet but I used to use during a banking internship:
https://corporatefinanceinstitute.com/resources/templates/excel-modeling/dcf-model-template/
- 933
1
vote
Newbie question on Net Present Value with Constant Growth
Correct calculation of perpetuity for the next year is following
- 11
1
vote
Accepted
In DCF, why is the discount rate interpreted as the minimum rate of return?
The discount rate (for interbank trades) is broadly treated as the risk free rate. So at worst you could obtain this rate for no risk, making it the minimum rate of return. No instrument should yield ...
- 3,589
1
vote
How can you find change in working capital and capital expenditures without a balance sheet?
You don't provide enough information. Yet, if you provide a little more information it might be possible. In theory -- one may recreate a statement for the source and use of funds (i.e., delta balance ...
- 2,825
1
vote
Accepted
Valuing corporate EUR loan of US entity? Which discount rate to use? US or EU?
You should use whatever currency in which the debt is denominated. Specifically, since it is the EUR currency and interest rate risk associated with the debt, some sort of EUR curve should be used.
...
- 709
1
vote
Using Gordon's Growth Model to find value of corporation
Under GGM dividends are used, under the assumption of constant growth. You're given FCF under the assumption of constant growth. So you could use FCFF or FCFE models. Since the question is asking for ...
- 11
1
vote
Logic behind Gordon Growth Model in a DCF analysis?
Your last cash flow is not correctly expressed as you forgot the $(1+r)^{-5}$ when you reinjected.
A $t= 5$ (in 5 years), your PV of the remaining cash flows is: $F_5 \sum_{k=1}^\infty (\frac{1+g}{1+...
- 221
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