Executive Summary Of Pepsico

Title	Executive Summary Of Pepsico
# of Words	578
# of Pages (250 words per page double spaced)	2.31

Executive Summary of Pepsico

Executive Summary of Pepsico

Through my research of Pepsico, I have calculated the cost of capital.   A
firm's cost of capital is imperative because it represents the funds used to
finance the firm's assets and operations.  First you have to estimate the cost
of capital in order to minimize it.

In estimating the cost of capital, you first have to find the cost of
each capital component and then combine the component costs to find the weighted
average cost of capital.  First, I calculated the cost of debt.  Pepsico's bond
consisted of 7 5/8 coupon rate, maturing in 1998 at a price of $1023.80.  I
figured the payments to be $38.15(.0763*1000/2).  I then used my financial
calculator to find the bond yield of 5.16% by entering in 1023.80=PV, 1000=FV, 2=
N, 38.15=PMT.  The bond was calculated semi-annually, therefore I multiplied the
answer for I/Y times 2 to get 5.16%.

The next step would be to calculate the preferred stock, however my
stock had none.  I then went to the third step of calculating cost of retained
earnings.  First I found the three growth rates which were historical, forecast,
and sustainable growth.  The historical and forecast annual rates I simply
pulled directly from Value Line under Past 10 years and estimated years of the
dividends.  They both were 14.0%.  The sustainable growth is calculated by
taking the retention rate (b) and multiplying it by the return on equity (r ).
To find b, I first calculated the dividends payout ratio which is DPS/EPS.  I
pulled DPS and EPS from value line under 1997.  Then to find the retention rate,
I subtracted the ratio from 1.  Next, I calculated r, by...This is ONLY a preview of the article. If you would like to view the entire document, you must subscribe to Electronic References. Please register below now!

Get This Full Article After Registration

When you subscribe to Electronic References, you get complete access to the meta-collection of full text articles and papers written by researchers and students spanning the last 5 years. For $19.95 a month, you will receive unlimited access and the ability to expand your research opportunities and knowledge.
This subscription package includes:

24-hours-a-day, 7 days a week unlimited access on any computer with Internet access

Complete access to all 60,000 articles, essays, and research papers

Ability to view, save, print and download any document you find

Ability to browse through perfectly arranged catalog of articles

Superior search and relevancy ranking techniques using our optimalized search engine

Instant access to the online database after registration

You can pay by credit card or checking account. You get instant access after registration:

1 Month ($ 19.95)

3 Months ($ 29.95)

6 Months ($ 39.95)

You will be billed $19.95 every 30 days or $29.95 every 90 days (recurring billing) starting on the day you subscribe.
Your credit card or checking account will automatically be renewed for your convenience until you cancel.

Home | Register | Login | Logout | Privacy Policy | Disclaimer | Help | FAQ | Contact Us | Cancel Subscription
Copyright 1998-2007 Electronic References. Electronic References is designed only to assist students and researchers in the preparation of their own work. Anybody who use our services are responsible not only for writing their own papers, but also for citing Electronic References as a source when doing so. By accessing and using this page you agree to the Disclaimer.