Stock Price Calculator

How does this stock price calculator work?

This investment calculator can help in estimating an acceptable purchase price of a stock by taking account of the following variables:

• Dividend per share now (DPS).

• Stock growth rate which (SGR) is the percentage of the increase on the dividends received year per year.

• Desired stock rate of return (DRR) which is a percent you specify you would like to earn from holding the stock.

• No. of share you want to buy (NSB).

The algorithm behind this stock price calculator applies the formulas explained here:

1. Finding the growth factor A = 1 + SGR*0.01

2. Computing the future dividend value B = DPS * A

3. Calculating the Estimated stock purchase price that would be acceptable C = B / (DRR*0.01 – SGR*0.01)

4. Then the following indicators  are computed:

- Total you will have to pay to purchase shares D = NSB * C

- Dividend value received in the 1^st year E = NSB * B

- Dividend value received in the 2^nd year F = E * SGR * 0.01

- Dividend value received in the 3^rd year G = F * SGR * 0.01

- Total cumulative dividends you could receive in 3 years H = E + F + G

Example of a calculation

Let’s assume an individual analyses the posibility to buy a stock that within the last period paid an average dividend of $15/share, while the stock growth rate is considered to increase by an average of 5% year per year, and the expected rate of return is 10%. What will the results be if 1,000 shares will be purchased?

■ Estimated stock purchase price that would be acceptable = $315.00

■ Total you will have to pay to purchase 1,000 shares = $315,000.00

■ Roughly estimate of the value of the dividends you will receive:

• In the 1^st year you will receive = $15,750.00
• In the 2^nd year you will receive = $16,537.50
• In the 3^rd year you will receive = $17,364.38

Total cumulative dividends you could receive in 3 years = $49,651.88.