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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: stock bull who wrote (137726)	7/27/1999 1:34:00 AM
From: Chuzzlewit	Read Replies (4) \| Respond to of 176387

Dell, along with all business, is impacted by higher interest rates in a number of ways. First, higher interest rates translate into higher costs for capital expenditures, so you can expect sales to decrease as interest rates climb. As a result, earnings tend to be curtailed. But a second issue is the pricing of equities. From a theoretical point of view, the value of an equity is the discounted value of the expected stream of cash flows. Higher interest rates translates into a bigger discount rate. But that's the tip of the iceberg. Growth companies realize the bulk of their cash flows years from now, and the present value of those distant cash flows decreases rapidly as interest rates rise. That's why growth companies such as Dell are disproportionately impacted when interest rates climb. TTFN, CTC