The below is a finance calculation that I am having trouble solving. Say you have a set of nominal cashflows, a perpetual growth rate and a net present value. How would you solve for the implied discount rate? (clearly there won't always be a solution)
So in an example where you know the NPV is 10 and you have 5 years of cashflows of 1 and a terminal value calculated using a perpetual growth rate of 2%.
Note that the Terminal value is calculated as final cashflow * (1+growth rate) / (discount rate - growth rate)*(1+discount rate)^-5
I need a solution that I can implement in excel so it can be iterative. Any ideas?
Thanks for any help!
edit: in this example the cashflows are the same but it would need to be generalised so this isn't required.
So in an example where you know the NPV is 10 and you have 5 years of cashflows of 1 and a terminal value calculated using a perpetual growth rate of 2%.
Note that the Terminal value is calculated as final cashflow * (1+growth rate) / (discount rate - growth rate)*(1+discount rate)^-5
I need a solution that I can implement in excel so it can be iterative. Any ideas?
Thanks for any help!
edit: in this example the cashflows are the same but it would need to be generalised so this isn't required.