This stock price calculator approximates an acceptable purchase price of a stock by considering dividends per share, your desired rate of return and a stock growth rate. There is in depth information on this topic below the tool.


Dividend per share now:*
$
Stock growth rate:*
%
Desired stock rate of return:*
%
No. of shares you want to buy:*

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 1st year E = NSB * B

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

- Dividend value received in the 3rd 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 1st year you will receive = $15,750.00
  • In the 2nd year you will receive = $16,537.50
  • In the 3rd year you will receive = $17,364.38

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

27 Feb, 2015 | 0 comments

Send us your feedback!

Your email address will not be published. Required fields are marked *.