Although some financial analysts believe that the consideration of a dividend policy is irrelevant, Kenco plc decided to pay out a dividend to attract investors and create demand for their stock. They plan to pay a dividend of £5 per share in year 1 and expects this grow constantly at 2%. 

a) What does this decision indicate? 

b) Will this decision affect the share price? 

c) Kenco has a discount rate of 12%, what is the share price? 

d) Why do you think some analysts are against dividend?

Answer rating: 100% (QA)

a Kencos decision to pay out a dividend indicates that the company wants to distribute a portion of ... View the full answer