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A firm just paid dividend D0, and it is expecting both earnings and dividends to grow by 0 percent in Years 1 and 2, by
A firm just paid dividend D0, and it is expecting both earnings and dividends to grow by 0 percent in Years 1 and 2, by 10 percent in Year 3, and at a rate of 5 percent in Year 4 and thereafter. The required rate of return is 15 percent, and its stock sells at the equilibrium price, P0 = $60. What is the expected value of the next dividend (D1)?
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