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Financial Analytics: Science and Experience
 

The modified model of discounted cash flow control

Vol. 2, Iss. 12, DECEMBER 2009

Available online: 23 December 2009

Subject Heading: FINANCE ENTERPRISES

JEL Classification: 

Мnatsakanyan A.G. Doctor of economic sciences Baltic institute of Economic and finance, Rector Baltic institute of Economic and finance
info@bief.ru

Reshetzky V.J. Doctor of physics and mathematics sciences, Docent of financial management department, Baltic institute of Economic and finance
golimay@mail.com

The Baumol-Tobin model of cash management is analyzed for more general cases. The method discounted cash flow is applied for long-term financial planning. The transcendental equation is obtained, which may be solved exactly by numerically only. Some approximated analytical solutions of this transcendental equation are obtained. It is shown, that known Baumol-Tobin solutions follows directly from the our transcendental equation, as the particular case of very small percentage rate. The detail analysis of the deterministic cash management is presente.

Keywords: Baumol-Tobin model, economic, forecasts, currency, thread, perpetuity, annuity, valuation, discounting, liquidity, Newton, minima

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ISSN 2311-8768 (Online)
ISSN 2073-4484 (Print)

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