Assumptions / clarifications: All: NOPAT is net operating profit after tax which equals EBIT x ( 1Tax Rate ). - The marginal tax rate is 34% (for Pepsi and for bottlers). The asset beta or unlevered beta of a bottler is 0.70. Do not use the 0.45 used in the case. The casewriter used the wrong formula. For the U.S.: Expected ination in the U.S. is 4%. For Mexico: - Ination rates given in Exhibit 15 are ination rates expected in Mexico in the absence of a revolution or some other shock. There is no longterm TreasuryBond in Mexico. - The spot exchange rate at the end of 1992/start of 1993 is 3.08 pesos per $. The forecast exchange rates are forecasts not futures or forward rates. b. GEUSA assumptions in case and gures in exhibits 8A and 8B are in $M, not pesos. Use 1992 as the first cash ow year. The $33 M value for 20% ($165 M total) refers to the value of debt and equity. I.e., GEUSA starts off with no debt. In exhibit 8A, net operating profit pretax should be net operating profit after tax. Grow the ISR tax in 1993 with sales. Profit margins in text refer to the ratio of NOPAT to sales. Growth rates in text refer to growth in $ sales. c. Deltex. Use 1993 as the first cash ow year. The $360 M value for 30% ($1.2 B total) refers to the value of equity. As of the end of 1992 / start of 1993, Deltex has some debt outstanding. - Use the net changes in working capital in the statement of changes. (They do not include cash or shortterm debt.) Ignore investments in affiliate and other assets