A.I.M. Users Bulletin Board

[karw]

Hi Bernie,

I played somewhat with discounted cash flows lately...

I was just discounting the dividend back to the original buy.
Just considering that a certain amount of money has a time value; needs to be valued at a certain moment in time.

So the cost of you initial outlay is increasing in time, with inflation, with a certain interest rate, with an expected rate of return etc, etc...

I am not talking about tax, just the time value of money and was triggered by your comparison of the car with an instantaneous discount to the dividend with a time spaced discount. (DDM: dividend discount model)

A very minor point. And indeed the value of cash changes in time: decreasing(inflation), leveling (no change, banque d'islam), increasing(japanese model) and also the lichello way: buying the same stock cheaper. Lichello made a couple of references to the erosion of money with time.

Hope this explains what my thoughts were, just a minor detail, K