Question
Kraft Food current stock price is 53.50. Kraft Food ROE today is 13.25%. The Plowback ratio for Kraft Food is .375%. Three years later Kraft
Kraft Food current stock price is 53.50. Kraft Food ROE today is 13.25%. The Plowback ratio for Kraft Food is .375%. Three years later Kraft Food is being acquired by Heinz Ketchup. In an external audit it was found that out that Kraft food could no longer maintain a Plowback ratio of .375%. Kraft Food released the following new information ROE of 9.25%, payout ratio .275%, market rate of 7.15%.
- What is the EPS and dividend growth in years 2-7?
- What is the current stock price? Why does the plowback ratio play a pivot role?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
To calculate the EPS and dividend growth we need to first calculate the new plowback ratio Plowback ...
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Corporate Finance
Authors: Jonathan Berk and Peter DeMarzo
3rd edition
978-0132992473, 132992477, 978-0133097894
