Answer to Question #134237 in Accounting for Rohit

Question

What is formula for calculating fair value of shares

Answer 1

1) The discounted cash flows.

$P=\sum{\frac{D}{(1+r)^n}}-Nv$

P-price; Nv-nominal value

D-dividends; r-interest rate

n-number of period

2) P/E (price to earnings) ratio.

the current stock price per share / current earnings per share