In this problem, you will calculate the cost of equity and weighted average cost of capital for nike as of may 31, 2014 be sure to explain any assumptions you make to arrive at your answers. Home » nike inc: cost of capital (v 18) nike inc: cost of capital (v 18) hbs case analysis this entry was posted in harvard case study analysis solutions on by case solutions. Ford is considering the addition of nike inc to the large-cap fund at northpoint group nike's share price has notably declined since the beginning of the year there are costs associated with raising capital and wacc is an average figure used to indicate the cost of financing a company's asset base. Nike, inc cost of capital nike, inc: cost of capital case 14 kristopher korzi meilin liu paul chen selcuk karahan 03/03/2011 case overview kimi ford is a portfolio manager at a large.
Nike inc (nyse: nke) is one of the world's largest apparel and footwear suppliers as of april 2016, the company had a trailing 12-month revenue of $319 billion and a market cap of $100 billion. Nike inc:cost of capital the weighted average cost of capital (wacc) is the overall required rate of return on a firm as a whole it is important to calculate a firm's cost of capital in order to determine the feasibility of a particular investment for a firm. Access to case studies expires six months after purchase date publication date: october 10, 2001 this is a darden case studyintroduces the weighted average cost of capital (wacc.
Nike, inc: cost of capital case analysis importance of cost of capital the concept of cost of capital is used in finance decisions acceptance or rejection of an investment project depends on the cost that the company has to pay for financing it. The weighted average cost of capital and its importance for nike inc the weighted average cost of capital (wacc) is the average of the costs of a company's sources of financing-debt and equity, each of which is weighted by its respective use in the given situation. When calculating cost of capital, the market value of debt and equity must be used the market value of equity is found by multiplying the stock price of v possible solutions the analyst team calculated nike inc cost of capital by using two different models and approaches and then choosing the best. This is a darden case studyintroduces the weighted average cost of capital (wacc) provides a wacc calculation, although it has been intentionally designed to assumes that students have been exposed to the wacc, capm, the dividend discount model, and the earnings capitalization model.
Company description nike, inc engages in the design, development, marketing, and sale of athletic footwear, apparel, accessories, equipment, and services. Nike inc cost of capital case study nike inc - nike inc cost of capital case study introduction case number 2 nike incorporated's cost of capital is a vital element when addressing opportunities regarding top-line growth and operating performance. Nike inc, cost of capital value 1 weight required rate of return 2 wacc = weighted average cost of nike's capital fcff growth rate (g) forecast nike inc, h.
Cost of capital book value vs market value while calculating the nike's cost of capital using both the book value (exhibit 11) and the market value (exhibit 12), i could notice the mistake cohen made finding the equity value. Kimi ford is a portfolio manager at northpoint large-cap fund on july 5, 2001, kimi ford wrote an analysis about nike, inc, the footwear manufacturing nike had experienced significant decline on the stock stock kimi ford decided to buy some nike's shares because ford believed nike's stock. The new topic nike inc cost of capital is one of the most popular assignments among students' documents if you are stuck with writing or missing ideas, scroll down and find inspiration in the best samples. Represents the weighted average cost of capital (wacc) provides calculation wacc, although it was designed to mislead the students thus, their task is to define and explain the errors in the analysis, which are designed to highlight the conceptual issues concerning the wacc and its components.
Nike was founded in 1964 and was formerly known as blue ribbon sports track star bill bowerman and his coach philip knight created blue ribbon sports which later became nike in 1978 let us write you a custom essay sample on nike inc: cost of capital for you for only $1390/page. Within the nike, inc case study, joanna's analysis of the estimated cost of debt was incorrectly calculated as she based the estimated cost of debt, 43%, on the total interest expense for year 2001 divided by the company's average debt balance. Chart and diagram slides for powerpoint - beautifully designed chart and diagram s for powerpoint with visually stunning graphics and animation effects our new crystalgraphics chart and diagram slides for powerpoint is a collection of over 1000 impressively designed data-driven chart and editable diagram s guaranteed to impress any audience.
Product overview on july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutual-fund management firm, pored over analyst write-ups of nike, inc, the athletic-shoe manufacturer. 1 |case analysis: nike inc, cost of capital i/ case background - kimi ford- the manager of the northpoint large-cap fund, which invested mostly in fortune 500 companies, weighing whether to buy nike's stock - nike had experienced a negative year: decline in sales growth, declines in profits and. As of today, nike inc's weighted average cost of capital is 642%nike inc's roic % is 2100% (calculated using ttm income statement data) nike inc generates higher returns on investment than it costs the company to raise the capital needed for that investment.