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Total capital gain is 1+(cost of capital - cash flows) ^ (yrs)-1 Can you explain step by step wh...

total capital gain is 1+(cost of capital - cash flows) ^ (yrs)-1

Can you explain step by step which one goes first second third and fourth.
such as
1. (cost of capital - cash flows)
2. ^ yrs
3. -1
4.+1.

thx




i just want to know how to perform the equation to get the correct result. something like i do t want to screw up pemdas order.
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Answer #1

Answer:

1. +1

2. (Cost of Capital - Cash Flow)

3. ^ yrs

4. -1

Explanations:

Firstly you should identify discounting rate for cost of capital and cash flow. Then we've to subtract one rate from another to get additional discounting rate. After which we have to add 1 to it to get Future value factor and then deduct 1 from it which was added earlier.

Note: In case you have any Query/Suggestions, feel free to ask me in the comment box.

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