Hello,
I would greatly appreciate it if you can you elaborate on the unwinding of the discount factor?
I would greatly appreciate it if you can you elaborate on the unwinding of the discount factor?
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Unwinding of the discount factor
16y ago#1It's basic dcf techniques, in reverse. the present value of 100 tomorrow at a cost of capital of 10% has a present value of 90.91.
As the year goes by, we need to unwind the discount. So, multiply 90.91 by 1 + 10% ie by 1.1 and you arrive in one year's time at the undiscounted amount of 100
As the year goes by, we need to unwind the discount. So, multiply 90.91 by 1 + 10% ie by 1.1 and you arrive in one year's time at the undiscounted amount of 100
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