5. Companies and growth rates Aa Aa Future value and present value concepts are

Question

5. Companies and growth rates Aa Aa Future value and present value concepts are applied in various ways, such as calclaing growth rates, earnings per share, expected sales and revenues in the future, and so forth Consider the following case: Pharmacist John S. Pemberton invented a soft drink in 1886 that eventually became not only an integra th other countries in Europe, before World War II. part of everyday life in the United states but also a symbol of consumerism worldwide. In 1929 the first company's sales growth rate for each time period in 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 the previous data given, calculate the the following table 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 Years 1934-1936 1936-1939 1934-1939 (Source: "Coca-Cola GmbH and world War Two," www.gettherealfacts.co.uk/docs/gmbh.pdf) During World war II, Coca-Cola Co. cut off all syrup sales to Germany in 1940, resulting in no sales from 1943 to 1945. If Coca-Cola's sales had grown from 1939 to 1945 at the same rate that they grew between 1934 and 1939 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 26.7bn cases. Assume the following sales distribution Unit Case Volume Eastern Europe Germany Spain Great Britain Ita France Other 20% 16% 14% 12% 9% 8% 21% If Coca-Cola's worldwide growth were to continue at the same growth rate as it did in Germany between 1939 and 2008, when sales grew at the rate of 10.26%, its hypothetical sales in Eastern Europe in 2053 (42 years from 2011) would be approximately billon cases. (Note: For this question, ignore other factors that affect sales.) lash Player WIN 30,0,0,15 3 3.341 200M-2016 Ap a. All rights reserved. 2013 Cengage Learning except as noted. All rights reserved Grade It Now Save & Continue

Explanation / Answer

1) Growth 1934 to 1936

= (Sales in 1936/Sales in 1934)1/2 - 1

   = (1/0.243)1/2 - 1

   = 1.0286 = 102.86%

1936-1939

growth = (4.5/1)1/3 - 1 = 0.651 = 65.1%

(to the power of 1/3 because 3 years in between 1936 and 1939)

1934- 1939

   growth = (4.5/.243)1/5 -1    =0.7928    = 79.28%

2) Sales in 1945

Growth from 1939 = 79.28 % annum ( equal to 1934-39)

Sales in 1945 = sales in 1939 * (1+0.7928)6

   = 4.5 * 1.79286

= 149.4 Mn

3)

Worldwide sales in 2011 = 26.7 Bn

growth = 10.26%

Worldwide sales in 2053 = 26.7 * 1.102642

   = 1614.607 Bn cases

Sales in eastern Europe in 2053 = 0.2 * 1614.607

=322.92 Bn Cases

Year 1934 1936 1939 Sales in Mn 0.243 1 4.5

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.