Corporate Valuation Using the Free Cash Flow Method Applied to Coca-Cola


The value of a corporation is the discounted present value of future cash flows provided by the company to the shareholders. The valuation process requires that the corporate financial decision maker determine the future free cash flow to equity, the short-term growth rate, the long-term growth rate, and the required rate of return based on market beta. The book discusses the Black-Scholes option pricing model and the weighted average cost of capital. The objective of this book is to provide a template for demonstrating corporate financial management using a real company – Coca-Cola. The data used in this book comes from the financial statements of Coca-Cola available on EDGAR. Other data are from SBBI, Yahoo! Finance, the U. S. Bureau of Economic Analysis, Stocks, Bonds, Bills, and Inflation, Market Results for 1926 -2010, 2011 Yearbook, Classic Edition, Morningstar, and US Department of the Treasury.


About the Author(s)

Carl B. McGowan

Carl B. McGowan, Jr., PhD, CFA is a faculty distinguished professor and professor of finance at Norfolk State University, has a BA in international relations (Syracuse), an MBA in finance (Eastern Mic…

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Pub Date

October 15, 2014





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