The formula to calculate the Price of Stock (P) is:
\[ P = \frac{D}{\%RoR} \]
Where:
Price of Stock is the price of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
Dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Rate of Return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost.
Let's assume the following values:
Using the formula:
\[ P = \frac{D}{\%RoR} \]
Evaluating:
\[ P = \frac{35}{4.5} \]
The Price of Stock is 7.77777777777778.
| Dividend | Rate of Return (%) | Price of Stock |
|---|---|---|
| 30 | 4.5 | 666.66666666666674 |
| 35 | 4.5 | 777.77777777777783 |
| 40 | 4.5 | 888.88888888888891 |