What is the mathematical relationship between the probability of a return and a discount rate/risk premium? (@isomorphisms @interfluidity?)
@doriantaylor @isomorphisms @interfluidity WACC? I think discount and return rate are independent vars. NPV is how you put them together.
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@vgr@isomorphisms@interfluidity I thought risk premium was what you added to weighted average cost of capital to get a discount rate…Thanks. Twitter will use this to make your timeline better. UndoUndo
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@vgr@isomorphisms@interfluidity …then you plug the discount rate into an iterated discounted cash flow function which gives you NPV…Thanks. Twitter will use this to make your timeline better. UndoUndo
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@vgr@isomorphisms@interfluidity …what I'm asking is if you have P(investment successful), how do you turn that into a risk premium? -
@doriantaylor@vgr@isomorphisms what do you mean by "probability of return"? an investment that returns X or 0 at some future time? - Show replies
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