This document provides formulas and descriptions for calculating values related to stock prices, dividends, and required rates of return. It includes formulas for calculating the value of stocks based on current/future dividends, dividend growth rates, and required rates of return. It also shows formulas for calculating the required rate of return based on current stock prices, dividends, and growth rates. An example calculation applies the formulas to determine a stock's current price and required rate of return.

1. General Mathematics

8. Notation Description
Po Stock’s value or stock’s price
Do Current dividend
D1 Year 1 dividend
r Required return’s rate
g Dividend’s growth rate
Pn Terminal future price

9. Required Given Formula
Value of the
Stocks
Current dividend, rate of
returns, dividend’s growth rate
𝑃𝑜 =
𝐷 𝑜 1 + 𝑔
𝑟 − 𝑔
Year 1 dividend, rate of returns,
dividend’s growth rate.
𝑃𝑜 =
𝐷1
𝑟 − 𝑔
Note: D1=Do(1+g)

10. Required Given Formula
Value of
the Stocks
Present value of a
series of dividends,
rate of returns,
present value of the
terminal price.
𝑃𝑜 =
𝐷1
1+𝑟
+
𝐷2
1+𝑟 2 + ⋯ +
𝐷 𝑛
1+𝑟 𝑛 +
𝑃 𝑛
1+𝑟 𝑛

11. Required Given Formula
Required
rate of
return
Current dividend, stock’s value,
dividend’s growth rate.
𝑟 =
𝐷 𝑜 1 + 𝑔
𝑃𝑜
+ 𝑔
Year 1 dividend, rate of returns,
dividend’s growth rate.
𝑟 =
𝐷1
𝑃𝑜
+ 𝑔

17. Thus, the current price of the stock is P757.14

19. Therefore, the required rate of return is approximately 7.99%

21. Therefore, the required rate of return is approximately 14%

23. THANK YOU
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