1. Current forecasts for Blues Limited is to pay dividends over the next four years, as follows:

Year	1	2	3	4
Dividends	$1.20	$1.36	$1.52	$1.63

At the end of four years you anticipate selling the stock at a market price of $16.47.

Required:

a) Using the dividend valuation model, compute the current price of the stock given a 15% discount rate.

b) Suppose that Blues Limited shares is currently trading at $11.50 would you buy the stock? Provide your reasoning.