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Coke versus Pepsi 2001 v 4.1 Case Analysis Overview
This
is a Darden case study assessment and solution. Written in December 2000 following
the merger news between the PepsiCo Inc. and the Quaker Oats Company, expects undergraduates/graduates
to survey the effect of the merger as far as the challenge between Coca-Cola
Co. and PepsiCo, and for worth development by each firm. Since the merger would
let PepsiCo manage Gatorade, which controlled an 83% offer in the games drink
industry, PepsiCo would strengthen it's settled lead against Coca-Cola Co., in
the non-fizzy drinks fragment. Would Coca-Cola's conventional high performance about
value creation be in danger in view of the merger? A complete examination of
the correlation among Pepsi and Coke case analysis download in Word Doc, PPT
and PDF design with excel solution present upon request now.?
Coca Cola vs pepsi 2001 Case Excel Calculations
EVA Analysis
Historical EVATM Estimation and Return Comparisons
Cost of Debt
Cost of Debt for Coca Cola
Cost of Debt for Pepsi
Cost of Equity
Cost of Equity for Pepsi
Cost of Equity for Coca-Cola
WACC Weights
Coca Cola
Pepsi
EVA
EVA for Coca Cola
EVA for Pepsi
Coke vs Pepsi 2001 Case Questions Answers
What is EVA? What are the advantages and disadvantages of using EVA as a measure of company performance?
Please examine the historical performances of Coca-Cola and PepsiCo in terms of EVA. What trends do you observe? What are the factors behind those trends? What do you think are the key drivers of EVA?
What is the weighted-average cost of capital (WACC) and why is it important to estimate it? Is the cost of capital something that managers set? Who sets it?
Calculate the WACCs for Coca-Cola and PepsiCo. Assume a tax rate of 35%. Be prepared to explain your assumptions for the following components:
Kd
Ke
Rf
beta
market risk premium
weights of debt and equity capital
Interpret the results of your WACC calculations. What observations can you make?
Calculate EVA for 2001 to 2003 using the forecasts given in the case and the WACCs you have estimated.
Interpret the results of your EVA calculation. If you had to choose between Coca-Cola and PepsiCo, which one would you choose? Why?