Questions: A stock can be valued by using the formula if the stock pays a constant annual dividend. - fixed coupon bond present value - present value of an annuity due - payout ratio - present value of an ordinary annuity - perpetuity present value

The answer is the last one: perpetuity present value.

Explanation for each option:

1. Fixed coupon bond present value: This formula is used to value bonds that pay a fixed interest (coupon) over time until maturity. It is not applicable to stocks paying constant dividends indefinitely.

2. Present value of an annuity due: This formula is used to calculate the present value of a series of payments made at the beginning of each period. It is not suitable for valuing stocks with constant dividends.

3. Payout ratio: This is a financial metric that shows the proportion of earnings a company pays to its shareholders in the form of dividends. It is not a formula for valuing stocks.

4. Present value of an ordinary annuity: This formula is used to calculate the present value of a series of payments made at the end of each period. It is not appropriate for valuing stocks with constant dividends.

5. Perpetuity present value: This formula is used to value a stock that pays a constant dividend indefinitely. The formula is \( \text{PV} = \frac{D}{r} \), where \( D \) is the dividend and \( r \) is the discount rate. This is the correct formula for valuing a stock with constant annual dividends.

In summary, the correct formula for valuing a stock that pays a constant annual dividend is the perpetuity present value.