Coca Cola Cost of Capital and Capital Structure Finance Assignment Help Analysis with Solutions
Q1. A recent Value Line report for Coca-Cola Company (its ticker symbol = KO) is provided in the course packet. (It is also included on the e-Learning site.) Use this information along with information from Bloomberg, Yahoo! Finance, Morningstar, and S&P Net Advantage (available on the UF Business Library site) to answer the following questions:
a. What is the percentage of debt (to be used in the WACC equation) in the firm’s capital structure? Assume that the book value of the firm’s debt approximates its market value and ignore other liabilities and deferred long-term liability charges. If 6/30/16 quarterly balance sheet data are unavailable, use the 3/31/16 quarterly balance sheet data. (Provide detailed support for your answer including the source(s) of data used.)
b. What is the percentage of equity (to be used in the WACC equation) in the firm’s capital structure? (Provide detailed support for your answer including the source(s) of data used.)
c. What is the firm’s before-tax cost of debt, rd? (Provide detailed support for your answer including the source(s) of data used. Try looking at Morningstar.com which gives a detailed listing of a firm’s bond issues or using the corporate bond screener in S&P Net Advantage. Consider only non-callable debt with maturities of at least (or as close to) 10 years.)
d. What is the firm’s cost of equity, rs? Assume the market risk premium is 6%. (Provide detailed support for your answer including the source(s) of data used.)
e. What is the firm’s WACC? Be sure to use the firm’s 2016 projected tax rate and not the firm’s past tax rate in this calculation. (Provide detailed support for your answer.)
f. Coke’s management is considering a new independent project with an IRR of 7%; it has the same risk as the firm’s typical capital budgeting project. Should the firm accept the project? Explain your answer.
How it Works
How It works ?
Step 1:- Click on Submit your Assignment here or shown in left side corner of every page and fill the quotation form with all the details. In the comment section, please mention product code mentioned in end of every Q&A Page. You can also send us your details through our email id email@example.com with product code in the email body. Product code is essential to locate your questions so please mentioned that in your email or submit your quotes form comment section.
Step 2:- While filling submit your quotes form please fill all details like deadline date, expected budget, topic , your comments in addition to product code . The date is asked to provide deadline.
Step 3:- Once we received your assignments through submit your quotes form or email, we will review the Questions and notify our price through our email id. Kindly ensure that our email id firstname.lastname@example.org and email@example.com must not go into your spam folders. We request you to provide your expected budget as it will help us in negotiating with our experts.
Step 4:- Once you agreed with our price, kindly pay by clicking on Pay Now and please ensure that while entering your credit card details for making payment, it must be done correctly and address should be your credit card billing address. You can also request for invoice to our live chat representatives.
Step 5:- Once we received the payment we will notify through our email and will deliver the Q&A solution through mail as per agreed upon deadline.
Step 6:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.
Features for Assignment Help
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.
We believe in providing perfect, relevant and 100% accurate solutions to the student as per questions asked. All our experts are perfect in providing that so as to give unique experience to the students.
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.
All our works are kept as confidential as we respect the integrity and privacy of our clients.
- Physics Assignment Help
- Chemistry Assignment Help
- Engineering Assignment Help
- Psychology Assignment Help
- Online exam Help
- Marketing Assignment Help
- Arts Assignment Help
- Sociology Assignment Help
- Project Management Assignment
- Case Study Help
- Nursing Assignment Help
- Research Assignment Help
- Operations Management Assignment help
- Accounting Assignment Help
- Biology Assignment Help
- Mathematics Assignment Help
- English Assignment Help
- Business Plan Help
- Essay Writing Help
- Human Resource Assignment Help
- Accounting Homework Help
- Computer Science Assignment Help
- Finance Assignment Help
- Economics Assignment Help
- Statistics Homework Help
- Management Assignment Help
- Strategy Management Assignment Help
- Auditing Assignment Help
- Information Management Assignment Help
- Online Assignment Writing help
- Best Assignment Help
- Humanities Assignment help
Q2. Sunshine Apparel Inc. (SAI) has two divisions, a business apparel division and a leisure apparel division. The risk-free rate is 3%, the market risk premium is 4.5%, and the levered beta on its stock is 1.25. Using the CAPM, the firm’s cost of equity is calculated as 8.625%. The firm’s tax rate is 35% and its before-tax cost of debt is 5%. Since the firm’s capital structure consists of 30% debt and 70% equity, its WACC is calculated as 7.0125%.
SAI has two main competitors in the leisure apparel business, Company A and Company B. SAI’s CFO has collected the following information regarding its competitors:
SAI’s CFO is interested in calculating a WACC for projects in its business apparel division. 50% of SAI’s revenue, profit, and assets come from the business apparel division, while the other 50% comes from the leisure apparel division. The company assumes that projects in both divisions are financed with 30% debt and 70% equity. Whatwould you estimate to be the WACC for a typical business apparel project for SAI?
Product Code :Fin08
To get answer for this question, kindly click here (Note: Don’t forget to write the product code in comment section)
You can also email us at firstname.lastname@example.org but please mentioned product code in the mail body while sending emails.You can browse more questions to get answer in our Q&A sections here.