Comments on: Calculating The Value Of A Business – Part III http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii Value Investing Blog Thu, 09 Sep 2010 02:28:59 -0500 http://wordpress.org/?v=2.9.2 hourly 1 By: Joe Ponzio http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii#comment-3254 Joe Ponzio Fri, 23 Apr 2010 06:28:07 +0000 http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii#comment-3254 Miles, You are correct in that 85% of $50 is $42.50. Now you have to work it backwards -- what rate of return would you need to turn $42.50 back into $50? Answer: 18%. Think about this for a second -- you buy a stock that falls 50%. Your $1,000 is now $500? You don't need a 50% return to be made whole; you need to double your $500 -- to earn 100%. Does that help? Miles,

You are correct in that 85% of $50 is $42.50. Now you have to work it backwards — what rate of return would you need to turn $42.50 back into $50? Answer: 18%.

Think about this for a second — you buy a stock that falls 50%. Your $1,000 is now $500? You don’t need a 50% return to be made whole; you need to double your $500 — to earn 100%.

Does that help?

]]> By: Ron http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii#comment-3232 Ron Tue, 20 Apr 2010 15:57:12 +0000 http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii#comment-3232 Miles, $43.47 X 1.15= $49.99 $42.50 X 1.15= $48.88 Does that help? Miles,

$43.47 X 1.15= $49.99

$42.50 X 1.15= $48.88

Does that help?

]]> By: Miles http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii#comment-3227 Miles Sun, 18 Apr 2010 09:58:18 +0000 http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii#comment-3227 Great article, but I have a question about the following sentence: "If your goal is to invest your money and earn 15% on average for the long term, you shouldn't pay more than $43.47 today to get $50 of cash one year from now." I would think that for a 15% return, you wouldn't want to pay more than $42.50; $43.47 seems like more than a 15% discount. Could anyone explain what's wrong with my math. Thanks, Miles Great article, but I have a question about the following sentence:

“If your goal is to invest your money and earn 15% on average for the long term, you shouldn’t pay more than $43.47 today to get $50 of cash one year from now.”

I would think that for a 15% return, you wouldn’t want to pay more than $42.50; $43.47 seems like more than a 15% discount.

Could anyone explain what’s wrong with my math.

Thanks,

Miles

]]> By: geno cash is king http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii#comment-1063 geno cash is king Fri, 14 Dec 2007 04:28:05 +0000 http://www.fwallstreet.com/article/28-calculating-the-value-of-a-business-part-iii#comment-1063 this story reminds me of criminal rogue dishwasher,Nick Guarino.He was one of the only "truths" on wall street saying the internet bubble would bust and it did.I only wish I could hear Radio free wall street underground once again for Christmas.Maybe Santa will bring me my wish?I miss hearing americans are broke but america is still the greatest country in the world!Secret Agent Man I miss you and GOD BLESS.Thank you for everything I sold my stocks early but not early enough!Iwas swindled out of part of my life savings but never again.I only invest in beer,gas and cigarette stocks and CASH IS KING!!!!! this story reminds me of criminal rogue dishwasher,Nick Guarino.He was one of the only “truths” on wall street saying the internet bubble would bust and it did.I only wish I could hear Radio free wall street underground once again for Christmas.Maybe Santa will bring me my wish?I miss hearing americans are broke but america is still the greatest country in the world!Secret Agent Man I miss you and GOD BLESS.Thank you for everything I sold my stocks early but not early enough!Iwas swindled out of part of my life savings but never again.I only invest in beer,gas and cigarette stocks and CASH IS KING!!!!!

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