Stock Value Calculator

More about this zero-growth stock value calculator so you can better understand how to use this solver: The price of a stock depends on whether it gives dividends or not and whether the dividend value grows or not. Assuming a zero-growth stock, with a dividend of \(D\) and a is discount rate of \(r\), the price of the stock is computed sing the following formula:

\[ \text{Zero-Growth Stock Value} = \displaystyle \frac{D}{r}\]

Example: Zero-Growth Stock

Question: Find the value of a zero-growth stock which has a dividend of $3.56 per year, per share, and it has a discount rate of 3.4%.

Solution:

This is the information we have been provided with:

• The dividend pay per period is \(D = 3.56\), and the appropriate discount rate per period is \(r = 0.034\).

Therefore, the price of the corresponding zero-growth stock is :

\[ \begin{array}{ccl} P & = & \displaystyle \sum_{n = 1}^{\infty} {\frac{D}{(1+r)^n}} \\\\ \\\\ & = & \displaystyle \frac{D}{1+r} + \frac{D}{(1+r)^2 } + ... \\\\ \\\\ & = & \displaystyle \frac{D}{r} \\\\ \\\\ & = & \displaystyle \frac{3.56}{0.034} \\\\ \\\\ & = & 104.71 \end{array} \]

Therefore, price for the stock price with zero-growth, a dividend of \(D = 3.56\) and a discount rate of \(r = 0.034\) is $\(104.71\).

Corporate Finance Calculators

You can use also a traditional stock price calculator .