Case ID: UV0008     Author: William Moore    Subject: Finance Price $ 75

Coke vs Pepsi 2001 v 4 1 Case Study Solution

Solution ID: 535     Words: 1836

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




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: 





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?