Assignment 05-Time Value of Money Pharmacist John S. Pemberton invented a soft d

Question

Assignment 05-Time Value of Money Pharmacist John S. Pemberton invented a soft drink Germany was a growing market for Coca-Cola, along in 1886 that eventualy became not only an integral with other countries in Europe, before World War II. part of everyday life in the United States but also a With the previous data given, calculate the symbol of consumerism Coca-Cola vending machines were installed in Germany, and in 1930, the German branch of the Coca-Cola Co. opened in Essen. worldwide. In 1929 the first company's sales growth rate for each time period in the foilowing table: Years 1934-1936 1936-1939 1934-1939Y Growth Rate Coca-Cola sales in Germany were 243,000 cases in 1934, 1 million cases in 1936, and 4.5 million cases in 1939. (Source: "Coca-Cola GmbH and World War Two,www.gettherealfacts.co.uk/docs/gmbh.pt During World War Il, C Cola Co. cut off all syrup sales to Germany in 1940, resulting in no sales from 1943 to grown from 1939 to 1945 at the same rate that they grew between 1934 1945. If Coca-Cola's sales had its sales in 1945 would have been approximately present value.) cases. (Hint: Use sales data from 1939 as the Coca-Cola's worldwide sales as of December 31, 2011, was 26.7 billion cases. Assume the following sales distribution: Unit Case Volume Eastern Europe 20% Germany Spain Great Britain Italy France Other 16% 14% 12% 9% 21% esc 20

Explanation / Answer

Year 1934- 1936 CAGR = [(Ending Value/ Beginning Value)^(1/n)]-1 CAGR = [$1,000,000/ $243,000)^(1/2)]-1 102.86% Year 1936- 1939 CAGR = [(Ending Value/ Beginning Value)^(1/n)]-1 CAGR = [$4,500,000/ $1,000,000)^(1/3)]-1 65.10% Year 1934- 1939 CAGR = [(Ending Value/ Beginning Value)^(1/n)]-1 CAGR = [$4,500,000/ $243,000)^(1/5)]-1 79.28% Future Value = $4.5 million x (1+79.28%)^6 $149.42 Million

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