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From |
"David Scheuer" <david.scheuer@gmx.de> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
st: Solving equations iteratively |

Date |
Wed, 05 May 2010 12:50:13 +0200 |

Hello everybody I am stuck in a problem. In order to rebuild cost of capital models, which determine cost of capital implied as the internal rate of return from a valuation model, I need to solve equations iteratively. For instance, this is the first (of 30) row in my dataset and I want to find r_CT in every row by solving the following equation. p_0 = 27.09 bv_0 = 18.02 eps_1 = 2.72 eps_2 = 2.94 eps_3 = 3.32 eps_4 = 3.96 eps_5 = 3.24 bv_1 = 19.38 bv_2 = 20.85 bv_3 = 22.51 bv_4 = 24.49 g_CT = .0125 r_CT = . p_0=bv_0+(eps_1-r_CT*bv_0)/(1+r_CT)+(eps_2-r_CT*bv_1)/(1+r_CT)^2+(eps_3-r_CT*bv_2)/(1+r_CT)^3+(eps_4-r_CT*bv_3)/(1+r_CT)^4+((eps_5-r_CT*bv_4)*(1+g_CT))/((r_CT-g_CT)*(1+r_CT)^4 , where only r_CT is an unknown variable. I know that it should be between 0 and 1 because it is an interest rate. I guess I have to write a program in mata but I am not quite familiar with the syntax yet. Thanks a lot for any suggestion. I would appreciate it very much. Have a nice day David * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**Follow-Ups**:**Re: st: Solving equations iteratively***From:*Austin Nichols <austinnichols@gmail.com>

**st: RE: Solving equations iteratively***From:*"Nick Cox" <n.j.cox@durham.ac.uk>

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