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st: Iterative solving of an equation
From
"David Scheuer" <[email protected]>
To
[email protected]
Subject
st: Iterative solving of an equation
Date
Tue, 20 Apr 2010 11:17:53 +0200
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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