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1. What is the weighted average cost of capital (WACC) and why is it important to estimate it? Who determines the WACC? 2. Calculate the

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1. What is the weighted average cost of capital (WACC) and why is it important to estimate it? Who determines the WACC? 2. Calculate the WACCs for Coca-Cola and PepsiCo. Assume a tax rate of 3596. Be prepared to explain your assumptions for the following components: a Ke (note: must use YTM to calculate the cost of debt) b. K. C. R d. Beta e. Market risk premium f. Weights of debt and equity capital 3. Interpret the results of your WACC calculations. What observations can you make? 4. Calculate ROIC for Coca-Cola and PepsiCo. What observations can you make? 5. Calculate EVA for 2001-2003 using the forecasts given in the case and the WACCs you have estimated. a. What is EVA? b. What are the advantages and disadvantages of using EVA as a measure of company performance

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