Kodak used to primarily produce and distribute photographic paper and developing
ID: 2645646 • Letter: K
Question
Kodak used to primarily produce and distribute photographic paper and developing materials for traditional (i.e., non digital) photographic methods. A sizable portion of their business was home photography. Since they were one of the few suppliers of such materials, as the population grew, so did the demand for their product. Consider the value of Kodak in 1970. At that time, the investment capital per share (ICPS) for Kodak was $20. Given their market power, their return on investment was 15%. During that time, the required rate of return on Kodak was .14. In 1970, the policy of Kodak was to plowback 25 percent of its earnings per share.
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
Explanation / Answer
ROI = 15%
Plowback Ratio = 25%
Gowth rate = 15%*25% = 3.75%
Required Rate of Return = 14%
ICPS = $ 20
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
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.