The Coca$-$Cola Company is a global soft drink beverage company $($ticker: KO$).$ The c$.$ Use the clean surplus accounting approach to derive the projected dividends for

common shareholders for Years $+1$ through $+5$ based on the projected

comprehensive income and shareholders' equity amounts. $($Throughout this

problem, you can ignore dividends to noncontrolling interests.$)$

d$.$ Use the clean surplus accounting approach to project the continuing dividend to

common shareholders in Year $+6.$ Assume that the steady$-$state long$-$run growth

rate will be $3\%$ in Years $+6$ and beyond.

e$.$ Using the required rate of return on common equity from Requirement a as a

discount rate, compute the sum of the present value of dividends to common

shareholders for Coca$-$Cola for Years $+1$ through $+5.$

f$.$ Using the required rate of return on common equity from Requirement a as a

discount rate and the long$-$run growth rate from Requirement d$,$ compute the

continuing value of Coca$-$Cola as of the beginning of Year $+6$ based on its

continuing dividends in Years $+6$ and beyond. After computing continuing value,

bring continuing value back to present value at the start of Year $+1.$

g$.$ Compute the value of a share of Coca$-$Cola common stock, as follows:

Compute the sum of the present value of dividends including the present

value of continuing value.

Adjust the sum of the present value using the midyear discounting

adjustment factor.

Compute the per$-$share value. h$.$ Using the same set of forecast assumptions as before, recompute the value of

Coca$-$Cola shares under two alternative scenarios. To quantify the sensitivity of

your share value estimate for Coca$-$Cola to these variations in growth and

discount rates, compare $($in percentage terms$)$ your value estimates under these

two scenarios with your value estimate from Requirement $g.$

$,$ Scenario $1$: Assume that Coca$-$Cola's long$-$run growth will be $2\%,$ not $3\%$ as

before, and assume that its required rate of return on equity is $1$ percentage

point higher than the rate you computed using the CAPM in Requirement a$.$

$,$ Scenario $2$: Assume that Coca$-$Cola's long$-$run growth will be $4\%,$ not $3\%$ as

before, and assume that its required rate of return on equity is $1$ percentage

point lower than the rate you computed using the CAPM in Requirement a$.$

i$.$ What reasonable range of share values would you expect for Coca$-$Cola common

stock? Where is the current price for Coca$-$Cola shares relative to this range?

What do you recommend?

following data for Coca$-$Cola include the actual amounts for Year $0$ and the projected

amounts for Years $+1$ through $+5$ for comprehensive income and common

shareholders' equity $($amounts in millions$).$