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So I have a discount rate of 9%, and a growth rate of 10%.  Then I have present value of -CF/1% ? and if I manage to match my growth rate to my discount rate I have infinite money?  (I'm obviously missing something important here)

(I presume the CF/r comes from the geometric series)

by njh on Thu Apr 22nd, 2010 at 06:56:10 PM EST
It assumes that the growth rate is less than the discount rate.

If the growth rate is greater than the discount rate, the series does not converge.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Apr 22nd, 2010 at 07:25:13 PM EST
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