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# How to Calculate Stock Price After Dividend

Original post by D. Laverne O'Neal of Demand Media

The day a dividend is approved by a corporation's board of directors, the amount of the dividend becomes a liability in accounting terms. At the end of the trading day, the stock price is adjusted to account for the dividend payout, and the new price is termed the ex-dividend price. The ex-dividend price is the closing stock price reduced by the price per share of the cash dividend. Performing the calculation is relatively straightforward.

## Cash Dividend

### Step 1

Find the price of the stock at the close of the trading day. For example, assume a stock with a price of \$50 a share.

### Step 2

Find out the value of the cash dividend paid out. Assume for the purposed of this example, that the per-share cash dividend is \$2.

### Step 3

Deduct the dividend amount from the stock's closing price. In this example, \$50 minus \$2 equals \$48. The adjusted price of the stock is \$48.

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