Example introductory video like always two balls later if there is demand so far so what you might say well that’s easy to quickly did you write on the board the company is going to generate hundred million thanks five years it’s only in the last five years Brisbane Property Valuers so it’s worth to our five hundred million not so fast all right go straight away you got a problem which is if you got your forecast right let’s assume you have is a hundred million in five years time worth as much as it is received in one year’s.

Time and the answer is no because inflation erodes the value of money over time now there’s not a math video and I cover sort of discounting somewhere else mentioned and but what I’m about to say is you can just add up these under millions and say well the company is worth million that’s the value of the income generated because you need to do something all discounted hence expressionistic.

Discounted cash flow so I’ll make another assumption here and you might belaying how can you make all these assumptions well in practice this inexactly what people need to do you apply this techniques is my next assumption I’m gonna say that interest rates in the next five years will be ten percent now if you take an interest rate of ten percent what you’re gonna be doing is saying well based on that one hundred million received in a year’s time is worth a little bit more of a hundred million received in two years time when you were a little bit more than hundred we believe in three years time and so on and so forehand.

The reason for that is that basically if you’ve got a hundred million in a year’s time you could be investing it was it this way to earn interest ten percent so it’s worth more to you than a hundred.