Book Value Discount Formula

Book value may also be.

Book value discount formula. Book value per share 30 1. In the example above the asset s book value after 6 years would be 10 000 6000 or 4000. Book value per share rs 30 per share.

The formula states that the numerator part is what the firm receives by the issuance of common equity and that figure increases or decreases depending upon the company is making profit or loss and then finally it decreases by issuing dividend and preference stock. The 1 st part will be to find out the equity which is available to its common shareholders. Book value per share book value of equity total shares outstanding.

Price to book value is calculated as. Calculate the cash flows for the asset and timeline that is in which year they will follow. To arrive at the book value simply subtract the depreciation to date from the cost.

Steps to calculate discounted values. Taking assumed values for the following. To calculate discounted values we need to follow the below steps.

Price to book value rs 100 rs 30. Discount rate is calculated using the formula given below discount rate t future cash flow present value 1 t n 1 discount rate 2 10 000 7 600 1 2 4 1 discount rate 6 98. The formula for calculating the book value per share is given as follows.

Note that the book value of the asset can never dip below the salvage value even if the calculated expense that year is large enough to put it below this value. Using the period end amount which includes short term events may provide incorrect results and may. Price to book value market price per share book value per share.