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A firm will pay a dividend of $0 one year from today and $5.00 two years from today (that is, D1 = $0 and D2
A firm will pay a dividend of $0 one year from today and $5.00 two years from today (that is, D1 = $0
and D2 = 5.00). Thereafter, the dividend is expected to grow at a constant rate forever. The price of
this stock today is $100 and the required rate of return on the stock is 10%. What is the expected
constant growth rate of the dividend stream from year 2 to infinity?
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