In this workout, we've been given three potential scenarios and valuations for Coca-Cola and we've been asked to use that information to provide a baseline valuation, a best case and worst case valuation, and finally, a probability rated valuation. Now the first thing we've been given is the net debt number for Coca-Cola, and that's important because for all of our scenarios we've only been given the enterprise value. So we can use the net debt to calculate the equity values. Now let's have a look at our scenarios. And the first of these is our base case. So that's the valuation using consensus analyst forecasts. And that's been assigned a probability of 45%. And you can see here that the assumption for long-term growth is 2%. And that assumption, along with a cash flow forecast, has been used to calculate an enterprise value. Now the next scenario that we have is a plastic regulation scenario. So that's assuming maybe that there's some additional taxation of plastics or maybe mandatory introduction of a deposit scheme for recycling plastic bottles. And that's being given a probability of 35%. Now the long-term growth rate here is a bit lower than for the consensus forecast at 1.8%, and you can see that the cashflow forecasts are also slightly lower than consensus. So presumably this scenario is assuming that the plastic regulation has some kind of negative impact on the profitability of Coca-Cola. Now the final scenario that we have is an innovation scenario. And that is a probability of 20% and slightly higher long-term growth than for the analyst forecast at 2.1%. So maybe this is a scenario assuming improved bottle design and maybe improved technology around recycling of plastics. And in the long-term, this could have a positive impact on the company's profitability, although in the short term the cashflow forecasts are still slightly lower than the consensus numbers. And maybe that's because the innovation scenario requires a bit of additional investment in the short term to achieve that longer term growth. Now we've had a look at each of the scenarios. Let's now calculate the equity values for each of those.

So first of all, the base case. We take our enterprise value and we deduct our net debt number. And we do exactly the same for our plastic regulation scenario, taking our enterprise value and deducting net debt. And finally, our innovation scenario. Take the enterprise value and deduct net debt from that. So we've got all of our equity values calculated. We can now go ahead and work out what the different valuations are. And we'll start off with our baseline valuations. So that's just the valuation using the analyst forecasts. And we've got that there. Now the best case valuation is the highest of all of those valuations. So we can use the max function for that. So we go up and we grab each of our valuations and Excel will tell us what the highest of those is. And the highest of those is 190,000, and that's using the innovation scenario. Now we can calculate the worst case valuation using the min function. So again, taking the valuations from each of our scenarios and Excel will tell us which the lowest of these is.

And the lowest of those is 179,000, and that's the regulation scenario. Now the final valuation is the probability rated one and for that, we're gonna take the probabilities for each of the scenarios and multiply it by the valuations for each of those scenarios. So we start off with our base case.

That's 45% multiplied by the valuation. And then we add to that the regulation probability of 35% and then the regulation valuation. And finally, the innovation probability of 20% multiplied by the innovation valuation. And now we've got our probability weighted valuation. And the best case and worst case valuation help us to identify the spread of likely valuations for Coca-Cola. And you can see there's a little bit more downside than upside compared with the base case. And the probability weighted valuation gives us a more average valuation using all of those scenarios.