What should be the price for a common stock paying $6.25 annually in dividends forever if the growth rate is zero and the discount rate is 8% (that is, r = 0.08)? Note that this is an instance of a zero-growth stock, therefore it behaves like a perpetuity.

Answer rating: 100% (QA)

Since the stock is a zerogrowth stock it can be valued ... View the full answer