One method of pricing a stock is to discount the stream of future dividends of the stock. Suppose that a stock pays per year in dividends and, historically, the dividend has been increased i% per year. If you desire an annual rate of return of r%, this method of pricing a stock states that the price that you should pay is the present value of an infinite stream of payments: 

The price of the stock is the sum of an infinite geometric series. Suppose that a stock pays an annual dividend of $4.00 and, historically, the dividend has been increased 3% per year. You desire an annual rate of return of 9%. What is the most you should pay for the stock?

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1 + i 1 + i 1 + r 1 + i\? = P + P+! Pitr) + P + . ... Price 1 + r 1 + r