Assignment Help-Bonds and dividends
Blue Sky Limited has just paid a dividend of 20 cents per share. Investors require a 16 per cent return from investments such as this. If the dividend is expected to grow at a steady 8 per cent per year, what is the current value of each share? What will the shares be worth in 5 years?
Now assume that the dividend is expected to grow at 20 per cent for the next 3 years and then settle down to 8 per cent per year. What price would the share sell for today?
