Added a new algorithm of dividend discount model, and improved a document of price_plus_tax.py under the folder "financial""

bit_manipulation/index_of_rightmost_set_bit.py

@@ -4,8 +4,9 @@
 def get_index_of_rightmost_set_bit(number: int) -> int:
     """
     Take in a positive integer 'number'.
-    Returns the zero-based index of first set bit in that 'number' from right.
-    Returns -1, If no set bit found.
+    Return the zero-based index of the first set bit in that 'number'
+    starting from right.
+    Return -1 if the set bit is not found.
 
     >>> get_index_of_rightmost_set_bit(0)
     -1

financial/dividend_discount_model.py

@@ -0,0 +1,51 @@
+"""
+Program using Dividend Discount Model to pricing a company's stock, given
+- Value of the next year dividend
+- Constant cost of equity capital
+- constant growth rate in perpetuity
+
+Wikipedia Reference: https://en.wikipedia.org/wiki/Dividend_discount_model
+"""
+
+
+def dividend_discount_model(
+    next_dividend: float, constant_cost: float, constant_growth: float
+) -> float:
+    """
+    Formula for Dividend Discount Model:
+    P = D1/(r-g)
+    where P is the expected price of a company's stock,
+    r is the rate of interest per month,
+    and n is the number of payments
+
+    >>> dividend_discount_model(25000, 0.12, 0.03)
+    277777.7777777778
+    >>> dividend_discount_model(25000, 0.12, 0.10)
+    1250000.0000000007
+    >>> dividend_discount_model(0, 0.12, 0.03)
+    Traceback (most recent call last):
+        ...
+    ValueError: The next year's dividend must be > 0
+    >>> dividend_discount_model(25000, -0.12, 0.03)
+    Traceback (most recent call last):
+        ...
+    ValueError: The rate of constant cost must be >= 0
+    >>> dividend_discount_model(25000, 0.12, 0)
+    Traceback (most recent call last):
+        ...
+    ValueError: The constant growth must be >= 0
+    """
+    if next_dividend <= 0:
+        raise ValueError("The next year's dividend must be > 0")
+    if constant_cost < 0:
+        raise ValueError("The rate of constant cost must be >= 0")
+    if constant_growth <= 0:
+        raise ValueError("The constant growth must be >= 0")
+
+    return next_dividend / (constant_cost - constant_growth)
+
+
+if __name__ == "__main__":
+    import doctest
+
+    doctest.testmod()

financial/price_plus_tax.py

@@ -1,5 +1,7 @@
 """
-Calculate price plus tax of a good or service given its price and a tax rate.
+Calculate price plus tax of a good or service given
+- Price
+- Tax rate
 """
 
 
@@ -10,6 +12,13 @@ def price_plus_tax(price: float, tax_rate: float) -> float:
     >>> price_plus_tax(125.50, 0.05)
     131.775
     """
+    # If the price is negative, it will raise a warning
+    if price <= 0:
+        raise Exception("The price must be >= 0")
+    # If the tax rate is negative or zero, it will raise a warning
+    if tax_rate <= 0:
+        raise Exception("The tax rate must be > 0")
+
     return price * (1 + tax_rate)