If the current price of a stock is $200 and the discount factor is 10 percent, what is the constant cash flow?

Name: If the current price of a stock is $200 and the discount factor is 10 percent, what is the constant cash flow?
Brand: Quizplus
Rating: 4.8 (57 reviews)

Question

Quizplus · Accepted Answer

To use the discounted cash flow model, we need to know the constant cash flow that we will receive in perpetuity. Using the formula for the present value of a perpetuity, we can find the constant cash flow:
$200 = C / 0.1
C = $20

If the Current Price of a Stock Is $200 and the Discount