Two corporations A and B have exactly the same risk and both have a current stock price of $100. Corporation A pays no dividend and will have a price of $120 one year from now. Corporation B pays dividends and will have price of $113 one year from now after paying the dividend. The corporations pay no taxes and investors pay no taxes on capital gains but pay a tax of 18 % income tax on dividends.

What is the value of the dividend that investors expect corporation B to pay one year from today?

Answer rating: 100% (QA)

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