Merge pull request #6 from tamilselvanarjun/tamil/growthfactorissue

The correct discount factor for a DCF model should be (1 + growth_rate) instead of 1 / (1 + growth_rate)
tamilselvanarjun · Mar 17, 2024 · acba9ef · acba9ef
2 parents 06d3a9e + 4e19c7d
commit acba9ef
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Showing 8 changed files with 4 additions and 6 deletions.
diff --git a/build/lib/finmodels/ipo.py b/build/lib/finmodels/ipo.py
@@ -8,7 +8,7 @@ def __init__(self, initial_valuation, funds_raised, operating_income, growth_rat
 
     def calculate_ipo_valuation(self):
         # Calculate the IPO valuation using a simple discounted cash flow (DCF) model
-        discount_factor = 1 / (1 + self.growth_rate)
+        discount_factor = 1 + self.growth_rate
         future_cash_flows = [self.operating_income * (discount_factor ** year) for year in range(1, self.years + 1)]
         total_cash_flows = sum(future_cash_flows)
         ipo_valuation = self.initial_valuation + total_cash_flows + self.funds_raised
@@ -18,7 +18,6 @@ def print_summary(self):
         ipo_valuation = self.calculate_ipo_valuation()
         print(f"IPO Valuation after {self.years} years: ${ipo_valuation:,.2f}")
 
-
 # Example usage
 #initial_valuation = 500000000  # Initial company valuation before IPO
 #funds_raised = 100000000  # Funds raised during the IPO

diff --git a/dist/finmodels-2.0.2-py3-none-any.whl b/dist/finmodels-2.0.2-py3-none-any.whl
diff --git a/dist/finmodels-2.0.2.tar.gz b/dist/finmodels-2.0.2.tar.gz
diff --git a/dist/finmodels-2.0.3-py3-none-any.whl b/dist/finmodels-2.0.3-py3-none-any.whl
diff --git a/dist/finmodels-2.0.3.tar.gz b/dist/finmodels-2.0.3.tar.gz
diff --git a/finmodels.egg-info/PKG-INFO b/finmodels.egg-info/PKG-INFO
@@ -1,6 +1,6 @@
 Metadata-Version: 2.1
 Name: finmodels
-Version: 2.0.2
+Version: 2.0.3
 Summary: finmodels is a Python package that provides various financial models for analysis and optimization.
 Home-page: https://github.com/arjunlimat/finmodels
 Author: Tamilselvan_Arjunan

diff --git a/finmodels/ipo.py b/finmodels/ipo.py
@@ -8,7 +8,7 @@ def __init__(self, initial_valuation, funds_raised, operating_income, growth_rat
 
     def calculate_ipo_valuation(self):
         # Calculate the IPO valuation using a simple discounted cash flow (DCF) model
-        discount_factor = 1 / (1 + self.growth_rate)
+        discount_factor = 1 + self.growth_rate
         future_cash_flows = [self.operating_income * (discount_factor ** year) for year in range(1, self.years + 1)]
         total_cash_flows = sum(future_cash_flows)
         ipo_valuation = self.initial_valuation + total_cash_flows + self.funds_raised
@@ -18,7 +18,6 @@ def print_summary(self):
         ipo_valuation = self.calculate_ipo_valuation()
         print(f"IPO Valuation after {self.years} years: ${ipo_valuation:,.2f}")
 
-
 # Example usage
 #initial_valuation = 500000000  # Initial company valuation before IPO
 #funds_raised = 100000000  # Funds raised during the IPO

diff --git a/setup.py b/setup.py
@@ -5,7 +5,7 @@
 
 setup(
     name='finmodels',
-    version='2.0.2',
+    version='2.0.3',
     packages=find_packages(),
     install_requires=[
         'numpy',