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.
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.
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