Suppose D0=1 and D1=$1.05 and it is expected that earnings and dividends will grow at a constant rate of 5.00% per year and that the stock's price will grow at this same rate. Let us assume that the stock is fairly priced and the required rate of return is 9.00%. When the growth rate is the required rate of return, you can use the following formula to calculate the price of the stock 4 years from today P0(gr3)4(1+R)2D1r0RD1P0(1+g)4 And the price of the stock 4 years from today is Suppose D0=1 and D1=$1.05 and it is expected that earnings and dividends will grow at a constant rate of 5.00% per year and that the stock's price will grow at this same rate. Let us assume that the stock is fairly priced and the required rate of return is 9.00%. When the growth rate is the required rate of return, you can use the following formula to calculate the price of the stock 4 years from today P0(grs)4(1+g)4D1rix4D1P0(1+g)4 And the price of the stock 4 years from today is