Dividend

[shahidalirajput]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by bilal hanif</i>
<br />Could anyone pls tell me the diff between real dividend & nominal dividend?
How do I calculate the real dividend per share for each year





thanks
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">


Dear Bilal Hanif

Basiclly 1st u need to understand what is Nominal and Real. In our dailly bussinesss life we are listening about nominal rate and real rate, some time it could be real/nominal interest rate some time it could be inflation rate what ever......

The Main difference between nominal and real is Inflation. Basically <u><b>Nominal = Real Rate + Inflation</b></u>, in the other hand <b><u>real is nominal-inflation</u></b> .

as.
<b><u>Real = Nominal - inflation </u> </b>
<u><b>Nominal = Real + inflation</b></u>

I hope u understand above difference now what is Nominal dividend and Real.
In Nominal Dividend inflation is included but in Real infltion is not included for example

xyz co. Achieve 100 Rs. Profit in Year 2009 and company pays 10% dividend to share holders and Inflation rate is 12%/ annum. clculate what is the Real Dividend(RD) and Nominl Dividend
(ND).
Real Dividend <b>RD = ?</b>
Nominal Dividend, <b>ND = ?</b>
Dividend Rate, <b>DR = 10%</b>
Inflation%, <b>i% = 12%</b>
Profit, <b>P = 100</b>

<b>ND = PROFIT*DR </b>
10 = 100 x 10%

Now 1st calculate inflation in the Dividend. i= i%*ND, i = 12% x 10 = 1.2
then
<b>RD = ND - i</b>
RD = 10 - 1.2
RD = 8.8

<b>SO ur Nominl dividend is 10 and Real is 8.8.</b>


Hope...!

<b>Regards</b>
<b>Shahid</b>