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%. 

1.  What is the EPS and dividend growth in years 2-7? 
2. What is the current stock price? Why does the plowback ratio play a pivot role? 

Answer rating: 100% (QA)

To calculate the EPS and dividend growth we need to first calculate the new plowback ratio Plowback ... View the full answer