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Why is PepsiCo suddenly so interested in Mexico?

This assignment is for my corporate finance class so it’s important that the writer is an expert in this field to be able to complete the assignment. The assignment is to read the attached case study and answer the following questions and support your answers with both quantitative and qualitative analysis.Questions:1. Why is PepsiCo suddenly so interested in Mexico? Do the regulatory changes really ben¬efit PepsiCo, the challenger?2. As a bottler, what kind of financing and organizational relationship would you want with PepsiCo? What is the preferred financing and organization structure from PepsiCo’s perspec-tive? Will the struc¬ture of the joint venture investment affect what PepsiCo is willing to pay? How?3. (a) How attractive was PepsiCo’s investment in GEUSA? In doing your valua¬tion, use exhibit 8A.Net operating profit before tax should be net oper¬ating profit af¬ter tax in ex¬hibit 8A.(b) How attractive (to PepsiCo) is the Sanchez proposal for PepsiCo to buy 30% of Deltex for 1.1 billion pesos ($360 million)?Both parts (a) and (b) require a present value analysis. They also require capital struc¬ture assumptions that you will need to justify. Part (b) is more difficult be¬cause it re¬quires you to make some assump¬tions about interest rates or exchange rates.Do not evaluate the investment in Protexa. (The projections may be inaccurate.)4. As Suarez, would you invest in the Sanchez/Deltex joint venture as proposed in the case? Why or why not? Can you suggest a joint venture arrangement that is more attractive to both PepsiCo and Deltex?Assumptions / clarifications:a. All:- NOPAT is net operating profit after tax which equals EBIT x ( 1-Tax Rate ).- The marginal tax rate is 34% (for Pepsi and for bottlers).- The asset beta or unlevered beta of a bottler is 0.70.Do not use the 0.45 used in the case. The casewriter used the wrong formu¬la.For the U.S.:- Expected inflation in the U.S. is 4%.For Mexico:- Inflation rates given in Exhibit 15 are inflation rates expect¬ed in Mex¬icoin the absence of a revolution or some other shock.- There is no long-term Treasury-Bond in Mexico.- The spot exchange rate at the end of 1992/start of 1993 is 3.08 pesos per $. – The forecast exchange rates are forecasts not futures or forward rates.b. GEUSA assumptions in case and figures in exhibits 8A and 8B are in $M, not pesos. Use 1992 as the first cash flow year. The $33 M value for 20% ($165 M total) refersto the value of debt and equity. I.e., GEUSA starts off with no debt.- In exhibit 8A, net operating profit pre-tax should be net operating profit af¬ter tax.- Grow the ISR tax in 1993 with sales.- Profit margins in text refer to the ratio of NOPAT to sales.- Growth rates in text refer to growth in $ sales.c. Deltex. Use 1993 as the first cash flow year. The $360 M value for 30% ($1.2 B total) refers to the value of equity. As of the end of 1992 / start of 1993, Deltex has some debt out¬standing.- Use the net changes in working capital in the statement of chang¬es. (They do not include cash or short-term debt.)- Ignore investments in affiliate and other assets.

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