Coca-Cola Amatil Ltd

  

Estimate WACC for Coca-Cola Amatil Ltd, (Ticker code – CCL:AU), at ending 31 Dec 12. Will need financial data from CCA website. Consider sources like: ‘The Bulletin’

Statistical Tables F2 (daily) and F3 available through RBA website, Bloomberg and Yahoo Finance. Use 31 December 2012 or June averages as appropriate. Coca-Cola Amatil Ltd uses a number of sources of debt and equity. You can make the following assumptions:

• Non-current ‘interest-bearing’ borrowings on the CCL Balance Sheet (in their annual report) reflect market value.

• An average yield on corporate bonds with a ‘BBB’ rating can be used in this analysis (see RBA Table F3).

• Coca-Cola Amatil has no preference shares issued.

• The CAPM is used to estimate the cost of ordinary equity.

• The 10-year Australian Treasury bond rate is an appropriate proxy for the risk-free rate (see RBA Table F2 – Daily).

• The beta for Coca-Cola Amatil has not varied significantly in the past 5 years and is not expected to change in the near future (see Reuters).

• Coca-Cola Amatil’s closing share price as at 31 December 2012 should be considered in the analysis (see Yahoo Finance).

• The market risk premium (also called equity risk premium) is 7%.

• Coca-Cola Amatil calculates its WACC assuming a classical tax system.

• The company’s tax rate is 30%.

Ensure that you set out full workings in a clear and logical fashion. Label all input figures, state any assumptions necessary for their use, and reference their source.