Business Case Studies & Business Publications

PepsiCo, Inc.: Cost of Capital

Eades, Kenneth M.,...

Case

PepsiCo, Inc.: Cost of Capital

Eades, Kenneth M.; Thornhill, David

F-0981 | Published September 4, 1991 | 12 pages Case

Collection: Darden School of Business

Product Details

A Wall Street Journal article states, "At PepsiCo, Inc., cola was king, but it is quietly being dethroned." PepsiCo is composed of three lines of business: soft drinks, restaurants, and snack foods. Using data from comparable pure-play companies, the student is asked to compute divisional costs of capital and see if they can be reconciled with the company's reported cost of capital, 11%.