Kodak used to primarily produce and distribute photographic paper and developing materials for traditional (i.e., non digital)
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1. For simplicity, assume that Kodak pays a dividend once a year. The next dividend payment will be exactly one year from now. Given Kodak's plowback policy, what was the dividend paid in 1971? Assume that it took all of 1970 to generate the earnings off of Kodak's $20.00 ICPS and that the reinvesting and paying of dividends occurred right at the beginning of 1971.
2. Given Kodak's plowback policy, what was the growth rate in the dividends payments through time?
3. Given Kodak's plowback policy, the market believed that Kodak could continue to generate 15 percent return on investment and would maintain its payout policy. Given these beliefs, what was a fair price for Kodak in 1970 immediately after it paid its 1970 dividend?
4. Given the assumptions listed above, what is the present value of Kodak's growth opportunities?
5. If Kodak increased its plowback ratio in 1970, what would have happened to their stock price? Circle one. go up go down no change cannot tell without more information Explain your answer.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For
An Introduction To Statistical Methods And Data Analysis
ISBN: 9781305465527
7th Edition
Authors: R. Lyman Ott, Micheal T. Longnecker
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