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Sir, suppose if the net cash flow is 6000 and is expected to grow by 4% assuming the cost of capital is 12% then will the value of cash flow be (6000*1.04)/(0.12-0.04)=78000?
Yes – assuming that the first cash flow is in 1 years time, and that the cash flow in 1 years time is 6,000 x 1.04 = 6,240.
(If the cash flow is 6,000 at current prices, then the cash flow in 1 years time will be 6,000 x 1.04.
If, on the other hand, the first cash flow in 1 years time is an actual 6,000, then the numerator (top of the formula) will be 6,000 and not 6,240. )
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