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    Computation of Expected Dividend

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    Stock A is expected to pay a dividend of $3.00 at the end of the year
    (D1 = $3.00). The dividend is expected to grow at a constant rate of 6% per year. The stock currently trades at a price of $50 per share. Stock price is in equilibrium.

    What is the stocks expected dividend at the end of Year 2?

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    Expected Dividends
    Stock A is expected to pay ...

    Solution Summary

    This explains the steps of computing expected dividends with the help of example.