1) 2) You observe the Kraft-Heinz Corp (Ticker: KHC) is currently paying dividends of $1.60/yr. Assuming an appropriate discount rate for KHC shares is 9%, what is the value of KHC shares if you are forecasting its dividends to grow at 4.5% per year indefinitely? Ans) div1-1.60*1.045= 1.672 PV-1.672/.09-.045 -37.16 Assuming that dividends do grow at 4.5%, what should KHC's share price be in 1 year? What about in 2 years? What is the capital gains yield expected to be on KHC shares? Ans) div2=1.60*1.045^2=1.75 PV=1.75/.09-.045-38.83 In one year the price would be 37.16 and in year two the price would be 38.83. Divl/Po+g=37.16/1.60+38.83-1.60/1.60 23.23+23.27-46.5

You observe the Kratt-Heinz Corp (Ticker: KHC) is currently paying dividends of $1.60/yr. Assuming an appropriate discount rate for KHC shares is 9%, what is the value of KHC shares if you are forecasting its dividends to grow at 4.5% per year indefinitely? Ans) divl=1.601.045=1.672PV=1.6721.09.045=37.16 Assuming that dividends do grow at 4.5%, what should KHC 's share price be in 1 year? What about in 2 years? What is the capital gains yield expected to be on KHC shares? Ans) div2 =1.601.0452=1.75 PV=1.751.09.045=38.83 In one year the price would be 37.16 and in year two the price would be 38.83 . Div1/Rotg =37.16/1.60+38.831.60/1.60 23.23+23.27=46.5