1. Can you find an error in equation 1
2. Look at Figure 1, how well does the regression line predict the actual results? What does the R2 in the regression equation (table1) mean? Does this give you confidence in the calculated Beta or not?
3. The authors use very long-term ranges to estimate risk free rate and market premium. What are the benefits and risks of this? Would you use a different range of number?
4. Discuss the Beta results of the calculation. What does it mean? Does it make sense to you with what you know about Coco Cola?
5. Check the cost of equity determined in the case against the current Coca Cola stock price. Find the recent growth rate and use the formula Return on equity = (Dividend next year divided by current price) + growth rate. Is it close, if not why would it be different?

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Calculating The Beta Coefficient And Required Rate Of Return For Coca-Cola John C. Gardner, University of New Orleans, USA Carl B. McGowan, Jr., Norfolk State University, USA Susan E. Moeller, Eastern Michigan University, USA