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1,919,304,000
1,389,882,000
932,880,000
520,000,000
135,604,000
471,138,000
5,368,808,000
5371
56.54
130607.4
135978.4
5371
5371
24799
0.216581314
Debt
equity
0.2:1 be 2:1 inference: company can borrow
generally
D/Eratio
ratiois should
more debt
Determine the cost of equity using the capital asset pricing model
(CAPM)
CAPM =Rf+beta(RM-RF)
4.58%+0.62(RM-4.58%)
Return from the market RM
0.115701749
4.58%+0.62(11.57%-4.58%)
8.91%
6.99
Bond1
Settlement
31/12/2009
maturity
11/15/2017
rate
5.35%
pr
109.8
Redemption
100
Basis
Yield (is also known as internal rate of return for investors they
are getting 3.8%
This yield is also otherwise called as cost to the company because
the company has to pay the money
LT debt
0.038919777
3.891977704
2004
1375
2005
1818
2006
1498
2007
1892
2008
1632
2009
2040
kd(1-t)
Using the appropriate market value proportions, the after-tax cost of debt calculated in question #5 and the cost of equity from q
average cost of capital (WACC).
WACC
(1-Tc)
3.0119
3.0119
Payout = Dividend/EPS
1-0.56
Return on Equity
Netincome/Total equity
0.275172386
What will the price of the Coca Cola Company stock be like if the zero growth, constant growth, and variable growth models are us
assume all earnings are paid out as dividends. Based on your findings, comment on the appropriateness of each of the valuation m
Notes:
Calculated valuation using dividends model
D0
1.64
Ke
0.089
g1
13%
G2
5%
i.e 11.5%
Bond 2
Bond3
Bond4
Bond5
Bond6
31/12/2009
31/12/2009
3/15/2019
3/15/2014
3/15/2011
7/29/2093
3/31/2018
4.88%
3.62%
5.75%
7.38%
5.30%
103.8
104
104.5
116.9
92.32
100
100
100
100
100
0.04373265
0.02608845
0.019521472
0.0630328
0.06516505
1.952147153 6.30327974
6.51650454
4.37326517 2.608845004
proportion of bonds
current price
31/12/2009 31/12/2009
years remaining
ytm
31/12/2009
cost of debt
35.7289145
109.8
3.90%
1.39342767
25.8797244
103.8
10
4.30%
1.11282815
17.3710668
104
2.60%
0.45164774
9.71886055
104.5
1.95%
0.18951778
2.53211692
116.9
84
6.30%
0.15952337
8.7693167
92.32
6.51%
0.57088252
100
3.87782722
6222
22.10% 0.22099004
6690
27.17% 0.27174888
6578
22.77% 0.22772879
7873
24.03%
7439
21.94% 0.21938433
8946
22.80% 0.22803488
23.47%
0.240315
in question #5 and the cost of equity from question #4, determine the weighted
apital (WACC).
50
54.9
45.1
57.4
42.6
52.9
47.1
61.0
39.0
56.0
44.0
55.3740882
0.44
30%
13.38777355
t growth, and variable growth models are used? In using the zero growth model,
appropriateness of each of the valuation models.
Year
Dividend
2009
91.9153846
PVIF@8.9%
PV
1.64
1.85 0.91827365
1.70174472
2.09 0.84322649
1.76581408
2.37 0.77431266
1.8322956
2.67 0.71103091
1.9012801
3.02 0.65292095
1.97286181
3.41
0.5995601
2.04713852
91.92
0.5995601
55.108797
108.98
5.10
66.33
33.33333