stockAnalyst (version 1.0.1)

computingRI: Calculates per share Residual Income using given values of Earnings Per Share (EPS) and beginning Book Values Per Share (bgnBVPS) for a specified number of years.

Description

Calculates per share Residual Income using given values of Earnings Per Share (EPS) and beginning Book Values Per Share (bgnBVPS) for a specified number of years.

Usage

computingRI(bgnBVPS, EPS, r)

Value

Input values to three arguments bgnBVPS

EPS,and r.

Arguments

bgnBVPS

A number vector.

EPS

A number vector.

r

A number.

Author

MaheshP Kumar,

Details

According to information provided by Jerald E. Pinto (2020), the method computingRI is developed to compute value of share using Residual Income Model with given values of Earnings Per Share (EPS) and beginning Book Values Per Share (bgnBVPS) for a specified number of years for the values passed to its four arguments. Here, bgnBVPS is a vector of the beginning or current book value per share for a specified number of years, EPS is a vector of the given values of Earnings Per Share for a specified number of years, and r is the required rate of return on the stock. The computingRI computes Residual Incomes as EPS minus per share equity charge for specified number of years and then computes sum of discounted values of Residual Income that is added to current Book value per share to arrive at the share value.

References

Pinto, J. E. (2020). Equity Asset Valuation (4th ed.). Wiley Professional Development (P&T). https://bookshelf.vitalsource.com/books/9781119628194

Examples

computingRI(bgnBVPS=c(6,7,8.25),EPS=c(2,2.5,4),r=0.10 )