Future value and present value concepts are applied in various ways, such as ca
ID: 2781566 • Letter: F
Question
Future value and present value concepts are applied in various ways, such as ca share, expected sales and revenues in the future, and so forth. lculating growth rates, earnings per Consider the following case: Pharmacist John S. Pemberton invented a soft drink in 1886 that eventually became not only an integral part of everyday life in the United States but also a symbol of consumerism worldwide. In 1929 the first Coca-Cola vending machines were installed in Germany, and in 1930, the German branch of the Coca-Cola Co. opened in Essen Germany was a growing market for Coca-Cola, along with other countries in Europe, before World War II With the previous data given, calculate the company's sales growth rate for each time period in the following table: Years 1934-1936 1936-1939 1934-1939 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. Session 10:00PM 201 Type here to search oe@eExplanation / Answer
Answer : growth rate for the following years would be
1934-1936
Sales in
1934 :243000
1936 : 1000000
1939 : 4500000
To calculate average annual growth rate formula is:
growth rate = ( recent year value/ base year value ) ^ ( 1/ no of years) - 1
Average annual growth rate 1934:1936 =( (1000000/243000)^ (1/2) - 1 ) *100 = 102.8602%
Similarly 1936- 1939 : ((4500000/1000000)^(1/3)-1)*100 = 65.09%
1934-1939 : ((4500000/243000)^(1/5) -1)*100 = 79.27%
Answer: sales in 1945 would be : sales in 1939 * ( 1+ growth rate) ^ (no of years )
4.5 million * ( 1 + 0.7927)^6 = 149.39 million
Answer is 149.42 million in 1945
Answering the third part : coca cola world wide sell as of dec. 31,2011 = 26.7 billion cases
sales in Italy in 2011 : 9% * 26.7 billion = 2.403 billion cases
Hypothetical sales in 2053, 42 years from now is
sales now * ( 1 + rate ) ^ ( no of time periods or years)
2.403 * ( 1 + 0.1026) ^ (42 ) = 145.3146 billion cases
Sales in Italy will be 145.3146 billion cases
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