Question

These questions are based on the 10-K for the year ended December 31, 2016 for PepsiCo, Inc. You can obtain Pepsi’s financial statements from the firm’s corporate web site at http://www.pepsico.com/Investors.html or from the SEC’s Edgar company filings site at https://www.sec.gov/edgar/searchedgar/companysearch.html. Unless otherwise indicated, all questions relate to the annual financial results.

Compute the average interest rate for Pepsi’s debt. You can do this by dividing interest expense by the average balance sheet amount for debt incurring interest (so exclude items such as current liabilities and deferred taxes).

Answer 1

Calculation of average interest rate of PEPSICO -   

= Interest Expense 2016 / Total debt obligation involving interest outflow 2016

= 1342 $ M / 30053 $ M

= 4.46 %

Note

1. Data are taken from official website of "pepsico"

2. Interest expense also includes the charge related to debt redemption i.e 233 $M. It can be excluded for computation of interest rate.

3. Only debt obligation are taken in debts of the company current liability and deffered tax are excluded.