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Technology Stocks : Internet Analysis - Discussion
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To: Chuzzlewit who wrote (21)2/2/1999 10:00:00 AM
From: Steve Robinett  Read Replies (1) of 419
 
CTC,
Okay, I'll give you your static Annuity Model for cash flow valuation as a ballpark way to value an asset but there's a problem with using 10% in a world with a 5% long treasury rate. Your hypothetical states, That's why a bank account paying out $1 per year is worth $10 regardless of whether I remove the money at the end of the year, or let it compound Since the long-term risk free rate of return these days is about 5%, an actual bank account that paid 10% would be worth more than $10. I haven't figured it out, but probably something like $12-13.
Best,
--Steve
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