We have discussed so far how to value preferred stock which really was the same way we valued a perpetuity last week. Price of Preferred Stock = Preferred Dividend / Required Rate of Return. For common stock it is little different. Let's assume that you are interested in buying a stock that just paid $10 in dividends. You estimate that dividends will grow at a rate of 5% forever( Constant Growth) and has a required rate of return of 10% on your investment. What is the price you should pay for this common stock?