I would like to know that when using the BSOp model to value a company , the value of Pe is calculated as
300×1.08^-5(power of negative 5)
OR
300×1.08^5 (power of positive 5)
Thank you.
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AFMBlack and Scholes Option Pricing Model
12y ago#1There is no specific formula for calculating Pe. How it is arrived at depends on the information in the question.
You will have to refer to a specific past exam question for me to give you a proper answer.
I have just done this Question (I think AggroChem, J10?)
In this particular example there is $3m 5yr floating rate loan... at yield rate plus 3% where the current yield is 5% (Which is where the 0.08 bit comes from)
To calculate PV in 5 years you need to use your PV Table... Or alternatively use the formula on the top of the table... (1+r)^(-n)
Hope this helps :)
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