is the value of expected profits or cash flows, discounted back to the present at an appropriate interest rate.2
This model can be expressed as follows:
Value of the Firm = Present Value of Expected Future Profits
Here, n1, n2, . . . nn represent expected profits in each year, t, and i is the appropriate interest, or discount, rate. The final form for Equation 1.1 is simply a shorthand expression in which sigma (X) stands for "sum up" or "add together." The term n
Was this article helpful?
Don't Blame Us If You End Up Enjoying Your Retired Life Like None Of Your Other Retired Friends. Already Freaked-Out About Your Retirement? Not Having Any Idea As To How You Should Be Planning For It? Started To Doubt If Your Later Years Would Really Be As Golden As They Promised? Fret Not Right Guidance Is Just Around The Corner.