# Calculation of market price of shares watch

1. i am student of financial management. i havent understood the following sentence and specially the formulae for calculating market value of shares.
it is walter's formulae to calculate market price per share.

formulae- P= div/k + {r( EPS- DIV)/K}/k

where p= market price per share.
div= dividend per share.
EPS= earning per share .
r= firms rate of return (average)
k= firms cost of capital or capitalisation.

he further says that, market price per share is the present value of 2 sources of income 1) the present value of the infinite stream of constant dividends, DIV/K and 2) the present value of the infinite stream of capital gains, { r(EPS-DIV)/K}/K.

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