How long do you estimate the transitory period to be? That is, how many years will it take for the dividend growth rate to settle down to a constant growth rate? (This is the variable h in the 3 stage DDM model.)

Number of years for the transitory period:__________________

Estimate the constant growth rate

What will be the constant growth rate of dividends? ______________________________

Explain your justification for the growth rates you are using for the 3-stage DDM valuation. Be sure to include any assumptions you are making that support your growth rate estimates

Calculate the Price Per Share according to 3-Stage DDM:

Price Per Share Value with 3-Stage DDM Valuation________________

Price Per Share Value with 2-Stage DDM:______________________________________

B D E F 1 Coca-Cola Co. 2 Consolidated Income Statement 3 4 US$ in millions 5 12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 6 Net operating revenues 37,266 31,856 35,410 41,863 7 Cost of goods sold (14,619) (11,770) (13,256) (16,465) 8 Gross profit 22,647 20,086 22,154 25,398 9 Selling, general and administrative expenses (12,103) (10,307) (12,496) (15,262) 10 Other operating charges (458) (1,079) (2,157) (1,510) 11 Operating income 10,086 8,700 7,501 8,626 12 Interest income 563 682 642 13 Interest expense (946) (919) (841) (733) 14 Equity income, net 1,049 1,008 1,071 835 15 Other income (loss), net 34 (1,121) (1,666) (1,234) 16 Income from continuing operations before income taxes 10,786 8,350 6,742 8,136 17 Income taxes from continuing operations (1,801) (1,623) (5,560) (1,586) 18 Net income from continuing operations 8,985 6,727 1,182 6,550 19 Income (loss) from discontinued operations, net of income taxes (251) 101 20 Consolidated net income 8,985 6,476 1,283 6,550 21 Net income attributable to noncontrolling interests (65) (42) (35) (23) 22 Net income attributable to shareowners of The Coca-Cola Company 8,920 6,434 1,248 6,527 23 Based on:10-K (Filing date: 2020-02-24),10-K (filing date: 2019-02-21),10-K filing date: 2018-02-23),10-filing date: 2017-02-24),10-K (filing date: 2016-02-25). Dec 31, 2015 44,294 (17,482) 26,812 (16,427) (1,657) 8,728 613 (856) 489 631 9,605 (2,239) 7,366 677 7,366 (15) 7,351 B D E F Coca-Cola Co. Consolidated Cash Flow Statement US$ in millions 12 months ended Dec 31, 2019 8,985 Dec 31, 2018 6,476 Dec 31, 2017 1,283 Dec 31, 2016 6,550 Consolidated net income Dec 31, 2015 7,366 8,985 1,365 201 (280) (421) 91 (467) 127 504 251 6,727 1,086 225 (450) (457) (38) 189 558 682 (101) 1,182 1,260 219 (1,256) (628) 281 1,459 1,218 (269) 6,550 1,787 258 (856) (449) 158 1,146 647 (224) 7,366 1,970 236 73 (122) (137) (374) 929 744 (158) (183) 66 (171) (141) (355) (28) (142) (212) (250) (87) (221) 571 283 123 (Income) loss from discontinued operations Net income from continuing operations Depreciation and amortization Stock-based compensation expense Deferred income taxes Equity income, net of dividends Foreign currency adjustments Significant (gains) losses, net Other operating charges S Other items (Increase) decrease in trade accounts receivable (Increase) decrease in inventories (Increase) decrease in prepaid expenses and other assets Increase (decrease) in accounts payable and accrued expenses Increase (decrease) in accrued income taxes Increase (decrease) in other liabilities Net change in operating assets and liabilities Net cash provided by operating activities Purchases of investments Proceeds from disposals of investments Acquisitions of businesses, equity method investments and nonmarketable securities Proceeds from disposals of businesses, equity method investments and nonmarketable securities Purchases of property, plant and equipment Proceeds from disposals of property, plant and equipment 1,318 96 (620) (289) (12) (575) (445) (153) 4,052 (540) 750 (544) 1,004 (306) (516) 366 10,471 (4,704) 6,973 (1,202) 7,320 (7.789 14,977 3,529 6,995 (16,520) 15,911 (221) 8,796 (15,499) 16,624 (157) 10,528 (15,831) 14,079 (5,542) (1,040) (3,900) (838) (2,491) 429 (2,054) 1,362 (1,347) 3,821 (1,675) 1,035 (2,262) 565 (2,553) 978 245 104 150 85 A B C D E F (91) 79 111 1 1 - - - - - - 31 Other investing activities (56) (60) (126) (209) (40) Net cash (used in) provided by investing 32 activities (3,976) 6,348 (2,385) (999) (6,186) 33 Issuances of debt 23,009 27,339 29,857 27,281 40,434 34 Payments of debt (24,850) (30,568) (28,768) (25,615) (37,738) 35 Issuances of stock 1,012 1,476 1,595 1,434 1,245 36 Purchases of stock for treasury (1,103) (1,912) (3,682) (3,681) (3,564) 37 Dividends (6,845) (6,644) (6,320) 16,043) (5,741) 38 Other financing activities (227) (243) 251 39 Net cash used in financing activities (9,004) (10,552) (7,409) (6,545) (5,113) Net cash provided by operating activities 40 from discontinued operations 307 Net cash used in investing activities from 41 discontinued operations (421) (65) Net cash provided by (used in)financing 42 activities from discontinued operations 205 (38) Net cash provided by discontinued 43 operations 91 Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted 44 cash equivalents (72) (262) 242 (6) (878) Net increase (decrease) in cash, cash equivalents, restricted cash and restricted 45 cash equivalents during the year (2,581) 2,945 (2,549) 1,246 (1,649) Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of 46 year 9,318 6,373 8,555 7,309 8,958 Cash, cash equivalents, restricted cash and 47 restricted cash equivalents at end of year 6,737 9,318 6,006 8,555 7,309 Restricted cash and restricted cash 48 equivalents at end of year (257) 49 Cash and cash equivalents at end of year 6,480 8,926 6,006 8,555 7,309 50 Based on:10-K (filing date: 2020-02-24),10-K {filing date: 2019-02-21).10-K (filing date: 2018-02-23),10-K (filing date: 2017-02-24),10-K (fling date: 2016-02-25). - 8 - (392) B C D E F 5 7 8 9 Dec 31, 2016 8,555 9,595 18,150 4,051 3,856 2,675 2,481 2,797 Dec 31, 2015 7,309 8,322 15,631 4,269 3,941 2,902 2,752 3,900 1 Coca-Cola Co. 2 Consolidated Balance Sheet: Assets 3 4 US$ in millions Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 6 Cash and cash equivalents 6,480 8,926 6,006 Short-term investments 1,467 2,025 9,352 Cash, cash equivalents and short-term investments 7,947 10,951 15,358 Marketable securities 3,228 5,013 5,317 10 Trade accounts receivable, less allowances 3,971 3,396 3,667 11 Inventories 3,379 2,766 2,655 12 Prepaid expenses and other assets 1,886 1,962 2,000 13 Assets held for sale 219 14 Assets held for sale, discontinued operations 6,546 7,329 15 Current assets 20,411 30,634 36,545 16 Equity method investments 19,025 19,407 20,856 17 Other investments 854 867 1,096 18 Other assets 6,075 4,139 4,230 19 Deferred income tax assets 2,412 2,667 330 20 Property, plant and equipment, net 10,838 8,232 8,203 21 Trademarks with indefinite lives 9,266 6,682 6,729 22 Bottlers' franchise rights with indefinite lives 109 51 138 23 Goodwill 16,764 10,263 9,401 24 Other intangible assets 627 274 368 25 Intangible assets, including goodwill 26,766 17,270 16,636 26 Noncurrent assets 65,970 52,582 51,351 27 Total assets 86,381 83,216 87,896 28 Based on:10-K (filing date: 2020-02-24),10-K (filing date: 2019-02-21,10-{filine date: 2018-02-23),10-K (filing date: 2017-02-24),10-X (filing date: 2016-02-25). 29 30 Consolidated Balance Sheet: Liabilities and Stockholders' Equity 31 34,010 16,260 989 3,922 326 10,635 6,097 3,676 10,629 726 21,128 53,260 87,270 33,395 12,318 3,470 3,847 360 12,571 5,989 6,000 11,289 854 24,132 56,698 90,093 Consolidated Balance Sheet: Liabilities and Stockholders' Equity Dec 31, 2016 2,682 2,186 2,593 857 692 372 108 9,490 12,498 3,527 307 710 Dec 31, 2015 2,795 2,186 2,430 936 743 444 126 9,660 13,129 2,677 331 1,133 US$ in millions Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Accounts payable 3,804 2,498 2,288 Accrued marketing expenses 2,059 1,787 2,108 Other accrued expenses 3,835 3,352 3,071 Accrued compensation 1,021 894 854 Deferred tax liabilities Accrued sales, payroll and other taxes 442 315 347 Container deposits 151 86 80 Accounts payable and accrued expenses 11,312 8,932 8,748 Loans and notes payable 10,994 13,194 13,205 Current maturities of long-term debt 4,253 4,997 3,298 Accrued income taxes 414 378 410 Liabilities held for sale 37 Liabilities held for sale, discontinued operations 1,722 1,496 Current liabilities 26,973 29,223 27,194 Long-term debt, excluding current maturities 27,516 25,364 31,182 Other liabilities 8,510 7,638 8,021 Deferred income tax liabilities 2,284 1,933 2,522 Noncurrent liabilities 38,310 34,935 41,725 Total liabilities 65,283 64,158 68,919 Common stock, $0.25 par value 1,760 1,760 1,760 Capital surplus 17,154 16,520 15,864 Reinvested earnings 65,855 63,234 60,430 Accumulated other comprehensive loss (13,544) (12,814) (10,305) Treasury stock, at cost (52,244) (51,719) (50,677) Equity attributable to shareowners of The Coca-Cola Company 18,981 16,981 17,072 Equity attributable to noncontrolling interests 2,117 2,077 1,905 Total equity 21,098 19,058 18,977 Total liabilities and equity 86,381 83,216 87,896 Based on:10-K (filing date: 2020-02-24),10-K (filing date: 2015-02-21),10-K (Filing date: 2018-02-23),10-(filing date: 2017-02-24),10-K (filing date: 2016-02-25). 26,532 29,684 4,081 3,753 37,518 64,050 1,760 14,993 65,502 (11,205) (47,988) 23,062 158 23,220 87,270 26,930 28,407 4,301 4,691 37,399 64,329 1,760 14,016 65,018 (10,174) (45,066) 25,554 210 25,764 90,093 B D E F 1 Coca-Cola Co. 2 Consolidated Income Statement 3 4 US$ in millions 5 12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 6 Net operating revenues 37,266 31,856 35,410 41,863 7 Cost of goods sold (14,619) (11,770) (13,256) (16,465) 8 Gross profit 22,647 20,086 22,154 25,398 9 Selling, general and administrative expenses (12,103) (10,307) (12,496) (15,262) 10 Other operating charges (458) (1,079) (2,157) (1,510) 11 Operating income 10,086 8,700 7,501 8,626 12 Interest income 563 682 642 13 Interest expense (946) (919) (841) (733) 14 Equity income, net 1,049 1,008 1,071 835 15 Other income (loss), net 34 (1,121) (1,666) (1,234) 16 Income from continuing operations before income taxes 10,786 8,350 6,742 8,136 17 Income taxes from continuing operations (1,801) (1,623) (5,560) (1,586) 18 Net income from continuing operations 8,985 6,727 1,182 6,550 19 Income (loss) from discontinued operations, net of income taxes (251) 101 20 Consolidated net income 8,985 6,476 1,283 6,550 21 Net income attributable to noncontrolling interests (65) (42) (35) (23) 22 Net income attributable to shareowners of The Coca-Cola Company 8,920 6,434 1,248 6,527 23 Based on:10-K (Filing date: 2020-02-24),10-K (filing date: 2019-02-21),10-K filing date: 2018-02-23),10-filing date: 2017-02-24),10-K (filing date: 2016-02-25). Dec 31, 2015 44,294 (17,482) 26,812 (16,427) (1,657) 8,728 613 (856) 489 631 9,605 (2,239) 7,366 677 7,366 (15) 7,351 B D E F Coca-Cola Co. Consolidated Cash Flow Statement US$ in millions 12 months ended Dec 31, 2019 8,985 Dec 31, 2018 6,476 Dec 31, 2017 1,283 Dec 31, 2016 6,550 Consolidated net income Dec 31, 2015 7,366 8,985 1,365 201 (280) (421) 91 (467) 127 504 251 6,727 1,086 225 (450) (457) (38) 189 558 682 (101) 1,182 1,260 219 (1,256) (628) 281 1,459 1,218 (269) 6,550 1,787 258 (856) (449) 158 1,146 647 (224) 7,366 1,970 236 73 (122) (137) (374) 929 744 (158) (183) 66 (171) (141) (355) (28) (142) (212) (250) (87) (221) 571 283 123 (Income) loss from discontinued operations Net income from continuing operations Depreciation and amortization Stock-based compensation expense Deferred income taxes Equity income, net of dividends Foreign currency adjustments Significant (gains) losses, net Other operating charges S Other items (Increase) decrease in trade accounts receivable (Increase) decrease in inventories (Increase) decrease in prepaid expenses and other assets Increase (decrease) in accounts payable and accrued expenses Increase (decrease) in accrued income taxes Increase (decrease) in other liabilities Net change in operating assets and liabilities Net cash provided by operating activities Purchases of investments Proceeds from disposals of investments Acquisitions of businesses, equity method investments and nonmarketable securities Proceeds from disposals of businesses, equity method investments and nonmarketable securities Purchases of property, plant and equipment Proceeds from disposals of property, plant and equipment 1,318 96 (620) (289) (12) (575) (445) (153) 4,052 (540) 750 (544) 1,004 (306) (516) 366 10,471 (4,704) 6,973 (1,202) 7,320 (7.789 14,977 3,529 6,995 (16,520) 15,911 (221) 8,796 (15,499) 16,624 (157) 10,528 (15,831) 14,079 (5,542) (1,040) (3,900) (838) (2,491) 429 (2,054) 1,362 (1,347) 3,821 (1,675) 1,035 (2,262) 565 (2,553) 978 245 104 150 85 A B C D E F (91) 79 111 1 1 - - - - - - 31 Other investing activities (56) (60) (126) (209) (40) Net cash (used in) provided by investing 32 activities (3,976) 6,348 (2,385) (999) (6,186) 33 Issuances of debt 23,009 27,339 29,857 27,281 40,434 34 Payments of debt (24,850) (30,568) (28,768) (25,615) (37,738) 35 Issuances of stock 1,012 1,476 1,595 1,434 1,245 36 Purchases of stock for treasury (1,103) (1,912) (3,682) (3,681) (3,564) 37 Dividends (6,845) (6,644) (6,320) 16,043) (5,741) 38 Other financing activities (227) (243) 251 39 Net cash used in financing activities (9,004) (10,552) (7,409) (6,545) (5,113) Net cash provided by operating activities 40 from discontinued operations 307 Net cash used in investing activities from 41 discontinued operations (421) (65) Net cash provided by (used in)financing 42 activities from discontinued operations 205 (38) Net cash provided by discontinued 43 operations 91 Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted 44 cash equivalents (72) (262) 242 (6) (878) Net increase (decrease) in cash, cash equivalents, restricted cash and restricted 45 cash equivalents during the year (2,581) 2,945 (2,549) 1,246 (1,649) Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of 46 year 9,318 6,373 8,555 7,309 8,958 Cash, cash equivalents, restricted cash and 47 restricted cash equivalents at end of year 6,737 9,318 6,006 8,555 7,309 Restricted cash and restricted cash 48 equivalents at end of year (257) 49 Cash and cash equivalents at end of year 6,480 8,926 6,006 8,555 7,309 50 Based on:10-K (filing date: 2020-02-24),10-K {filing date: 2019-02-21).10-K (filing date: 2018-02-23),10-K (filing date: 2017-02-24),10-K (fling date: 2016-02-25). - 8 - (392) B C D E F 5 7 8 9 Dec 31, 2016 8,555 9,595 18,150 4,051 3,856 2,675 2,481 2,797 Dec 31, 2015 7,309 8,322 15,631 4,269 3,941 2,902 2,752 3,900 1 Coca-Cola Co. 2 Consolidated Balance Sheet: Assets 3 4 US$ in millions Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 6 Cash and cash equivalents 6,480 8,926 6,006 Short-term investments 1,467 2,025 9,352 Cash, cash equivalents and short-term investments 7,947 10,951 15,358 Marketable securities 3,228 5,013 5,317 10 Trade accounts receivable, less allowances 3,971 3,396 3,667 11 Inventories 3,379 2,766 2,655 12 Prepaid expenses and other assets 1,886 1,962 2,000 13 Assets held for sale 219 14 Assets held for sale, discontinued operations 6,546 7,329 15 Current assets 20,411 30,634 36,545 16 Equity method investments 19,025 19,407 20,856 17 Other investments 854 867 1,096 18 Other assets 6,075 4,139 4,230 19 Deferred income tax assets 2,412 2,667 330 20 Property, plant and equipment, net 10,838 8,232 8,203 21 Trademarks with indefinite lives 9,266 6,682 6,729 22 Bottlers' franchise rights with indefinite lives 109 51 138 23 Goodwill 16,764 10,263 9,401 24 Other intangible assets 627 274 368 25 Intangible assets, including goodwill 26,766 17,270 16,636 26 Noncurrent assets 65,970 52,582 51,351 27 Total assets 86,381 83,216 87,896 28 Based on:10-K (filing date: 2020-02-24),10-K (filing date: 2019-02-21,10-{filine date: 2018-02-23),10-K (filing date: 2017-02-24),10-X (filing date: 2016-02-25). 29 30 Consolidated Balance Sheet: Liabilities and Stockholders' Equity 31 34,010 16,260 989 3,922 326 10,635 6,097 3,676 10,629 726 21,128 53,260 87,270 33,395 12,318 3,470 3,847 360 12,571 5,989 6,000 11,289 854 24,132 56,698 90,093 Consolidated Balance Sheet: Liabilities and Stockholders' Equity Dec 31, 2016 2,682 2,186 2,593 857 692 372 108 9,490 12,498 3,527 307 710 Dec 31, 2015 2,795 2,186 2,430 936 743 444 126 9,660 13,129 2,677 331 1,133 US$ in millions Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Accounts payable 3,804 2,498 2,288 Accrued marketing expenses 2,059 1,787 2,108 Other accrued expenses 3,835 3,352 3,071 Accrued compensation 1,021 894 854 Deferred tax liabilities Accrued sales, payroll and other taxes 442 315 347 Container deposits 151 86 80 Accounts payable and accrued expenses 11,312 8,932 8,748 Loans and notes payable 10,994 13,194 13,205 Current maturities of long-term debt 4,253 4,997 3,298 Accrued income taxes 414 378 410 Liabilities held for sale 37 Liabilities held for sale, discontinued operations 1,722 1,496 Current liabilities 26,973 29,223 27,194 Long-term debt, excluding current maturities 27,516 25,364 31,182 Other liabilities 8,510 7,638 8,021 Deferred income tax liabilities 2,284 1,933 2,522 Noncurrent liabilities 38,310 34,935 41,725 Total liabilities 65,283 64,158 68,919 Common stock, $0.25 par value 1,760 1,760 1,760 Capital surplus 17,154 16,520 15,864 Reinvested earnings 65,855 63,234 60,430 Accumulated other comprehensive loss (13,544) (12,814) (10,305) Treasury stock, at cost (52,244) (51,719) (50,677) Equity attributable to shareowners of The Coca-Cola Company 18,981 16,981 17,072 Equity attributable to noncontrolling interests 2,117 2,077 1,905 Total equity 21,098 19,058 18,977 Total liabilities and equity 86,381 83,216 87,896 Based on:10-K (filing date: 2020-02-24),10-K (filing date: 2015-02-21),10-K (Filing date: 2018-02-23),10-(filing date: 2017-02-24),10-K (filing date: 2016-02-25). 26,532 29,684 4,081 3,753 37,518 64,050 1,760 14,993 65,502 (11,205) (47,988) 23,062 158 23,220 87,270 26,930 28,407 4,301 4,691 37,399 64,329 1,760 14,016 65,018 (10,174) (45,066) 25,554 210 25,764 90,093