Dr Pepper Snapple Group Financial Analysis

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Company Overview:
The Dr. Pepper Snapple group was founded in 2009 and was formed when Cadbury Schweppes demerged its beverage section in 2007 from the company. This allowed the Dr. Pepper Snapple Group to go public and begin growing as its own entity offering an IPO of $25.80. Currently the company holds rights to concession stands throughout the National Hockey League, they also are owners of Dallas Stars home arena in Frisco, Texas. In 2009 the Dr. Pepper Snapple group purchased a majority share in Big Red Inc., which then made them the producers of Big Red, NuGrape, Nesbitt’s, and other flavored drinks. A major accomplishment of theirs was reducing the amount of PET in plastic bottles by over 60 million pounds between 2009 and 2014. Which
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To do this we summed up the total value of the Book/Market value and then took each of the sources and divided them by the total. After finding the weights, we then moved onto finding the cost for each sources of capital. To find the cost of debt we used two different methods. For the private corporate public bonds, we used the matching method. We found that Dr Pepper and Snapple Group Incorporated’s, long-term debt rating was a BBB+. We then matched it to the best fit from the average yield of US corporate bonds by maturity and rating table. For the public bonds, we used Yield to Maturity to calculate their costs, using the excel function “=frequency*rate (n, pmt, pv, fv)”. To then find the cost of common stock we had to do the three different methods and take the average. The first method used was CAPM and we used the risk-free interest rate given from the company’s 10K report. The market risk premium was given in the instructions. Beta was found by searching the company on Yahoo Finance! Under the statistics portion. The next method used was the dividend growth model, for this we pulled the stock price from yahoo finance on October 9th. We then got the dividend next period from the Value Line Stock Report that was pulled on October 9th, the estimated dividend growth rate was also taken from the stock report. The last method calculate was the yield of outstanding long-term bond and we take the cost of debt which was calculated before and added the premium over bond which was given. After doing so you take the average of the three for the best cost of common

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