Future value and present value concepts are applied in various ways, such as cal
ID: 2820146 • Letter: F
Question
Future value and present value concepts are applied in various ways, such as calculating growth rates, eami share, expected sales and revenues in the future, and so forth. Consider the following case: Pharmacist John S. Pemberton invented drik 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. a soft drinkGermany 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 Growth Rate 1934-1936 1936-1939 Coca-Cola sales in 1934-1939 in 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 ail 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, in 1945 would have been approximately cases. (Hint: Use sales data from 1939 as the present value.)Explanation / Answer
Sales in 1934 of Coca Cola = 243,000 cases
Sales in 1936 of Coca Cola = 1,000,000 cases
Sales in 1939 of coca cola = 4,500,000 cases
Growth rate 1934-36 = (1,000,000/243000)1/2 -1 =102.86%
Growth rate 1936-39 = (4,500,000/1,000,000)1/3 -1 = 65.10%
Growth rate 1934-39 = (4,500,000/243000)1/5 -1 =79.28%
Approximate sales in 1945 = 4,5000,000 * (1+79.28%)6= 149,396,355.13
Assuming 2 years no sales then = 4,5000,000 * (1+79.28%)4= 46,483,359.24
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