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Corporations pay no taxes. Investors pay no taxes on capital gains, but they pay a 28% income tax on dividends. The operations of two all-equity-financed

Corporations pay no taxes. Investors pay no taxes on capital gains, but they pay a 28% income tax on dividends. The operations of two all-equity-financed corporations have the same risk, and both have a current stock price of $100. Corporation A pays no dividend and will have a price of $110 one year from now. Corporation B pays dividends and will have a price of $105 one year from now after payment of a dividend. What is the amount of the dividend that investors expect Corporation B to pay?

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