Compute Stock Price: 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.
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:
?
S&P price at the beginning of the horizon (P)
?
Profit-GDP ratio at the end of the horizon
?
S&P price at the end of the horizon
Your input values:
Growth rate of earnings (g)
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