Ex Div Price Formula
Ex div price or ex
dividend share price formula has been given below. This formula has been
explained with an easy example.
Ex Div Price = Share Price before
Dividend- Dividend (to be paid)
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Ex div or ex dividend
price is simply the price of share before dividend. Ex div price concept is
widely used during the calculation of cost of equity i.e. dividend is divided
by the ex div share price.
Ex Div Price Formula Example
Share
Price (Market value) = 12
Dividend
for Year = 4
Calculate
Ex Div Price?
Solution
Ex
Div Price = Share Price before Dividend- Dividend (to be paid)
= 12-4
=8 (Ex Div Price)
Cost of Equity Example
Share
Price (Market value) = 16
Dividend
for Year = 2
Calculate
Ex Div Price and cost of equity
Solution
Ex
Div Price = Share Price before Dividend- Dividend (to be paid)
= 16-2
=14 (Ex Div Price)
Cost of equity = Dividend/Ex Div Price
= 2/14
=14.2% (cost of equity)
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