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Strategies & Market Trends : Due Diligence - How to Investigate a Stock -- Ignore unavailable to you. Want to Upgrade?

To: John Sladek who wrote (490)	5/26/1999 9:23:00 AM
From: Henry Volquardsen	Respond to of 752

John, my pleasure. I was actually extremely happy to see someone raise the discounted net present value concept. I'm a big advocate of the concept. When trying to value complex derivatives it is very useful to bring all the components back to cash value. It gives a much cleaner picture. Henry

To: John Sladek who wrote (490)	5/29/1999 1:42:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 752

John, actually, hen I used to do M&A work, I used a "subjective" scale for the rate of discounting, going all the way from the current 30 years bond rate, for outfits that had measurable revenues and profits and excellent visibility of future profits to 3 times as much (meaning of course that cash flow some 7 years down the road is worth ziltch) for companies in the "start up phase" where the uncertainty was much higher, thus the "hurdle rate" always included a "metric" of technological risk (well, I was involved with technology) as well as market risks. A similar type of metrics could and should be used when valuing ongoing outfits. Zeev