Question

'the oil search Ltd currently pays a cash dividend of $5 per share.the dividend will be increased by 4% each year indefinitely.How big will the dividend be in eight years?'.

Answer 1

let the dividend at end of 8 years be A

A = P(1+R/100)^t

  = 5 ( 1 + 4/100)^8
   = 5 (1.04)^8
  =  5 x 1.3686
  = 6.843

the dividend per share will be $6.843.