A company paid a $2.88 dividend last year. At a constant growth rate of 6%, what is the value of the common stock if the investors require a 15% rate of return? Solution price of stock = 2.88 ( 1 + 0.06) / (0.15 - 0.06) =2.88 * 1.06 / 0.09 = 3.0528 / 0.09 = $33.92.