Question: Substitute reasonable numbers for Coca-Cola (see the suggestions below) into Eq. (14.21). (a) What value does the equation provide? (b) How do you explain the
Substitute reasonable numbers for Coca-Cola (see the suggestions below) into Eq. (14.21).
(a) What value does the equation provide?
(b) How do you explain the differences between the formula result and the spreadsheet result?
(c) Suppose that Coke is able to increase its sales growth rate by an extra 1 % every year forever, by accepting a decline in its rate of return. Use Eq. (14.21) to estimate how much return it could give up while maintaining the same value.
Suggested parameter values:
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EBIT-4.000B-: 6,000 Tc- 33% K 15% WACC-: 8.3% N-10years 52% pretax 8.45% r k.
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a Equation 1421 is the finite supernormal growth model Substituting in the suggested parameters we g... View full answer
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