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How do Gordon models calculate share price?

How do Gordon models calculate share price?

Gordon Growth Model Share Price Calculation The formula consists of taking the DPS in the period by (Required Rate of Return – Expected Dividend Growth Rate). For example, the value per share in Year is calculated using the following equation: Value Per Share ($) = $5.15 DPS ÷ (8.0\% Ke – 3.0\% g) = $103.00.

How do I calculate price per share in Excel?

Book Value per Share = (Shareholders’ Equity – Preferred Equity) / Total Outstanding Common Shares

  1. Book Value per Share = (Shareholders’ Equity – Preferred Equity) / Total Outstanding Common Shares.
  2. Book Value per Share = $(25,000,000- $5,000,000) / $10,000,000.
  3. Book Value per Share = $2.

How do you calculate price per share on an income statement?

Key Takeaways

  1. Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock.
  2. EPS (for a company with preferred and common stock) = (net income – preferred dividends) ÷ average outstanding common shares.
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How do you calculate current share price?

The Price-Earnings Ratio is calculated by dividing the current market price per share of the stock by earnings per share (EPS). (Earnings per share are calculated by dividing net income by the number of shares outstanding.) The P/E Ratio indicates how much investors are willing to pay per dollar of current earnings.

How do you calculate stock price?

Use a simple formula to determine the present value of the stock price. The formula is D+E/(1+R)^Y where D is any dividends expected to be paid during the period, E is the expected stock price, Y is the number of years down the line, and R is the real rate of return you estimated.

How do you calculate future value of investment?

The formula for the future value of this lump sum investment is as follows: The first part of this equation, (FV₁ = PV + INT) reads, “the future value (FV) at the end of one year, represented by the subscript letter ᵢ, equals the present value plus the added value of the interest at the specified interest rate.

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How do you calculate stock growth?

The future value figure will be the present value when seeking past growth. Divide the result by the present value. Here you have $30 divided by $25 equals 1.2. Turn this into a percentage and you get 120 percent.