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8. Firm B is expected to pay a dividend of $2.00 at the end of Year 1 and $3.00 at the end of Year 2.

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8. Firm B is expected to pay a dividend of $2.00 at the end of Year 1 and $3.00 at the end of Year 2. The firm is expected to pay $3.15 (5% greater than the dividend in Year 2) in Year 3, and the company will continue to pay dividends at the 5% growth rate afterward. Compute the expected stock price today, given the required rate of return is r. 8%

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