Question 1: (25 marks)

You are asked as a financial manager to perform an EPS/EBIT Analysis for Coca-Cola, Ltd. You were given the following instructions: the Amount Coca-Cola needs: $5,000 million to build four new manufacturing plants outside the United States, at an Interest rate of 5%, a Tax rate of 21%. The Coca Cola Stock price is $45.54 as of January 2, 2018 with a number of shares outstanding of 4,255 million. You were given the following 3 EBIT scenarios: Pessimistic: $7,000 million, Realistic: $9,000 million and Optimistic: $11,000 million.

1. Prepare an EPS/EBIT analysis for Coca-Cola. Determine whether the company should use all debt, all stock, or a 50-50 combination of debt and stock to finance this market-development strategy. Develop an EPS/EBIT chart after completing the EPS/EBIT table. (20 marks)
2. Next, give your recommendations for Coca-Colas CFO. (5 marks)