# Coke v Pepsi WACC

In order to find the WACC for both Coca-Cola and Pepsi, we need to first determine different costs and values.  To begin, we need to find the debt and equity weights of each company.  The market value of equity of a publicly traded company is simply the number of outstanding shares multiplied by the current market share price.  This is shown below.

Finding Market Value of Equity:

The Coca-Cola Company:

Share price as of December 4, 2000: \$62.75

Diluted Outstanding shares: 2,487,000,000

Market Value of Equity = (\$62.75) (2,487,000,000) = \$156,059,250,000

PepsiCo, Inc:

Share price as of December 4, 2000: \$43.81

Diluted Outstanding shares: 1,475,000,000

Market Value of Equity = (\$43.81) (1,475,000,000) = \$64,619,750,000

Next we need to find the value of debt for each company.  Market value is generally the best way to achieve this, but because we were not given the number of outstanding shares the book value is sufficient.  This is acceptable because neither company has experienced a significant change in credit ratings in the recent years. We look to the Balance Sheets of both companies and use the most recent year (2001). The main contributors to Book Value of Debt are Notes Payable, the Current Portion of Long Term Debt, and Long Term Debt.  This is shown below.

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