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) |
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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