Cost of Issuing New Securities

Coca-Cola plans on financing the entire investment via the issuance of new equity and debt. These new securities issues will be structured so as not to alter the current capital structure of the firm (the relative weightings of common equity, preferred equity, and debt will remain unchanged).

Coca-Cola will need to have $350 million left over after paying the underwriting fees related to the issuance of these new securities. Underwriting fees are determined based upon the size of the issuance. If Coca-Cola will have to pay a fee of 4% of the total amount of financing raised to the investment bank handling the issuance, what is the updated NPV of the project?

Question 8) The NPV of the project, updated to reflect the underwriting fees, is:

$____________________________.

The Coca-Cola Company (KO) NYSE - NYSE Delayed Price. Currency in USD In watchlist 89 Visitors trend 2w1 10W 1 9M 1 $49.58-0.23 (-0.43%) At close: November 27 1:00PM EST Summary Company Outlook Chart Conversations Statistics Historical Data Profile Financials Analysis Options Previous Close 49.81 Market Cap 211.296B 1D 5D 1M 6M YTD 1 5Y Max * Full screen 50.36 Open 50.11 Beta (5Y Monthly) 0.59 Bid 49.57 x 2200 PE Ratio (TTM) 25.69 50.11 Ask 49.59 x 1200 EPS (TTM) 1.93 49.58 Day's Range 49.24 - 50.36 Earnings Date Jan 28, 2021 - Feb 01, 2021 49.24 52 Week Range 36.27 -60.13 Forward Dividend & Yield 1.56 (3.15%) Volume 8,499,289 Ex-Dividend Date Nov 30, 2021 10 AM 12 PM Trade prices are not sourced from all markets Avg. Volume 15,055,041 1y Target Est 56.40 The Coca-Cola Company (KO) NYSE - NYSE Delayed Price. Currency in USD In watchlist 89 Visitors trend 2w1 10W 1 9M 1 $49.58-0.23 (-0.43%) At close: November 27 1:00PM EST Summary Company Outlook Chart Conversations Statistics Historical Data Profile Financials Analysis Options Previous Close 49.81 Market Cap 211.296B 1D 5D 1M 6M YTD 1 5Y Max * Full screen 50.36 Open 50.11 Beta (5Y Monthly) 0.59 Bid 49.57 x 2200 PE Ratio (TTM) 25.69 50.11 Ask 49.59 x 1200 EPS (TTM) 1.93 49.58 Day's Range 49.24 - 50.36 Earnings Date Jan 28, 2021 - Feb 01, 2021 49.24 52 Week Range 36.27 -60.13 Forward Dividend & Yield 1.56 (3.15%) Volume 8,499,289 Ex-Dividend Date Nov 30, 2021 10 AM 12 PM Trade prices are not sourced from all markets Avg. Volume 15,055,041 1y Target Est 56.40