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CafeSi Inc. (publicly traded firm) plans to pay a dividend of $8 next year. CafeSi follows a dividend policy that raises dividends annually at a
CafeSi Inc. (publicly traded firm) plans to pay a dividend of $8 next year. CafeSi follows a dividend policy that raises dividends annually at a rate of 2% (and expects this rate to go forever). The required rate of return is 8%. You plan to compute the price at the end of year 2 using the constant growth dividend model (Gordon model).
What is the amount of dividend to use if you want to compute the stock price at the end of year 2?
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