Compute Earnings Growth: Input Values
The stock-price formula is
P = D(1+s)/(1+r) + D(1+s)
^{2}
/(1+r)
^{2}
+
^{...}
+ D(1+s)
^{T}
/(1+r)
^{T}
+ E(1+g)
^{T}
Z/(1+r)
^{T}
April 7, 2011, actual values. Enter others if desired.
S&P price at the beginning of the horizon (P)
Dividend value at the beginning of the horizon (D)
Earnings value at the beginning of the horizon (E)
Profit-GDP ratio at the beginning of the horizon
Values to be computed:
?
Growth rate of earnings (g)
?
Profit-GDP ratio at the end of the horizon
?
S&P price at the end of the horizon
Your input values:
Length of horizon (T)
Discount rate (r)
Growth rate of dividends (s)
PE ratio at the end of the horizon (Z)
Growth rate of nominal GDP