Business Finance Homework Help

Mini case #2 – Stocks & Bonds

Instructions:

Answer all questions and submit assignment in blackboard by the due date. Each question is 5 points for a total of 25 points. Partial credit given if work is shown.

Case Narrative:The financial data for Kraft Heinz Company (KHC) is provided below. This information is to be used to answer the mini-case questions.

Equity Information: Kraft Heinz Company (Source Yahoo! Finance)

2018 Dividend Data

Additional Information for Kraft Heinz Company:

• Annual dividend for the COMMON STOCK is expected to grow at a rate of 2%
• Kraft’s PREFERRED STOCK currently sells at a price of $25 per share.It pays a dividend of $1.50 (which is NOT expected to grow)

Bond Information: Kraft Heinz Company

Additional Information for Kraft Heinz Bond Issue:

• The bond has 10 years remaining until maturity

• What is the market capitalization for the Kraft Heinz Company? ____________________________________________________ Chapter 4
• What is the cost (required rate of return) of Kraft’s preferred stock? ______________________________________________________ Chapter 7
• What is the cost (required rate of return) of Kraft’s common stock? _______________________________________________________Chapter 7
• What is the cost (yield to maturity %) for Kraft’s bonds? _______________________________________________________Chapter 6
• What caused Kraft’s current bond price to increase in price from the original issuance price?_______________________________________________Chapter 6