Zero Growth If dividends are expected at regular intervals forever,then this is like preferred stock and is valued as a perpetuity ■Po=DIR Suppose stock is expected to pay a $0.50 dividend every quarter and the required return is 10%with quarterly compounding.What is the price? ·P0=.50/(.1/4)=.50/.025=$20 99 Zero Growth n If dividends are expected at regular intervals forever, then this is like preferred stock and is valued as a perpetuity n P0 = D / R n Suppose stock is expected to pay a $0.50 dividend every quarter and the required return is 10% with quarterly compounding. What is the price? § P0 = .50 / (.1 / 4) = .50 / .025 = $20