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From |
Austin Nichols <austinnichols@gmail.com> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
Re: st: Solving equations iteratively |

Date |
Wed, 5 May 2010 12:34:26 -0400 |

See e.g. http://www.stata.com/statalist/archive/2010-04/msg01113.html On Wed, May 5, 2010 at 6:50 AM, David Scheuer <david.scheuer@gmx.de> wrote: > 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/

**References**:**st: Solving equations iteratively***From:*"David Scheuer" <david.scheuer@gmx.de>

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