标题: FF/GF- Use Real v. Nominal Required Return?? [打印本页] 作者: himanshumh 时间: 2011-7-13 13:32 标题: FF/GF- Use Real v. Nominal Required Return??
On the sample question set, the 3 vingette asks to calc the franchise P/E and intrinsic P/E, the answer has it calc the required return (1/r) using the nominal return, why is this??
- i thought since maybe the forecast of earnings (pro-forma etc) are done usually on a nominal basis that the return should correspond, is this assumption valid?作者: Pegasus2008 时间: 2011-7-13 13:32
the only place real return is used is when the inflation flow thro' portion (formula) is used. otherwise it is nominal cash flows at nominal discount rate.
CP作者: kingstongal 时间: 2011-7-13 13:32
No its always nominal. Real is used in the P/E ratio for value of the firm (the formula that has inflation flow through and inflation in the denominator).
