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# Re: st: Iterative solving of an equation

 From Stas Kolenikov To statalist@hsphsun2.harvard.edu Subject Re: st: Iterative solving of an equation Date Tue, 20 Apr 2010 09:40:15 -0500

```In Stata, there's a very old -ridder- command -- it relies on Stata 3
or some other stone age version of Stata. In Mata, you can find
-mm_root()- and -mm_nrroot()- functions in Ben Jann's -moremata-
package.

On Tue, Apr 20, 2010 at 4:17 AM, David Scheuer <david.scheuer@gmx.de> wrote:
> I am rebuilding cost of capital models, which determine cost of capital implied as the internal rate of return from a valuation model.
>
> For instance, let me assume this is the first line in my dataset and I want to solve the following equation.
>
> Price_0 = 100
> BookValue_0 = 50
> EPS_1 = 3
> BookValue_1 = 52
> EPS_2 = 4.5
> g = 0.04
> x =?
>
> 100=50+(3-x*50)/(1+x)+(4-x*52)/((1+x)^2)+((4.5-x*54)*1.04)/((x-0.04)*(1+x)^2)
>
> For example, in Excel, I would let the "Solver" find the solution for x.
> How can I program STATA to find solutions like this for me?
> --
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>

--
Stas Kolenikov, also found at http://stas.kolenikov.name
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```