Shean,
I agree with your calculations and it makes sense to me. I prepared a spread sheet for different values for duration, discount rate and earnings growth rates. I am fascinated to see the figures and like to have your comments:
$1 EPS/year now with inflation = i (e.g.=.10) and growth = g (e.g. = .05) for stated # of years has Present Value = PV
i-g =
years 0.01 0.025 0.05 0.075 0.1 0.15 0.2 -0.01 -0.025 -0.05 -0.075 -0.1 -0.15 -0.2
P V
5 $4.9 $4.8 $4.5 $4.3 $4.2 $3.9 $3.6 $5.1 $5.3 $5.6 $5.9 $6.2 $7.1 $8.2
10 $9.6 $9.0 $8.1 $7.4 $6.8 $5.8 $5.0 $10.5 $11.2 $12.7 $14.6 $16.8 $23.1 $33.3
15 $14 $13 $11 $9 $8 $7 $6 $16 $18 $22 $27 $35 $59 $110
20 $18 $16 $13 $11 $9 $7 $6 $22 $26 $34 $46 $65 $141 $343
50 $40 $29 $19 $14 $11 $8 $6 $65 $99 $228 $596 $1,737 $19,154 $280,256
100 $64 $38 $21 $14 $11 $8 $6 $171 $451 $3,190 $29,973 $338,829 $64,779,122 $19,636,373,857
PV = E * (1-d^n) / (1-d) where d = 1/(1+i-g), E=EPS
Becasue of the page width limitation, the rows wrap around.
If this creates problem, I can fax the information to any body interested.
I think my calculations should be very close to yours but more accurate.
Murti |
