Company Z?s dividends per share are expected to grow indefinitely by 5
percent a year.  If next year?s dividend is $10 and the market
capitalization rate is 8 percent, what is the current stock price?

Po (the current stock price) = DIV1/(r - g), where DIV1 is $10, g is
5%, and r is 8%.  (Principles of Corporate Finance, fourth edition,
Brealey & Myers, McGraw-Hill Inc., 1991, page 52)

Therefore, the current stock price equals 10/(.08 -.05) equals $333.33.

Sincerely,

Wonko