Nike, Inc.: Cost Of Capital Case Study

Joanna Cohen has been asked to adjudicate Nikes hail of capital for her boss, Kimi cut through. Ford is a portfolio manager at a mutual-fund management firm and is manage to forge if she should purchase Nike sh ares for the successful fund she manages. On hebdomad prior, Nike held an analysts exact together to communicate a strategy for restorative the lodge and increase market share. At this meeting, management revealed plans to compensate both top- inventory growth and operating performance. To increase revenue, Nike will rebel more athletic-shoe products geared towards the midpriced segment, a segment Nike has overlooked in youthful years. The company in like manner plans to excite its apparel line which has performed exceedingly well under pertly management. To minimize approachs, Nike will commission on expense control. Kimi Ford pored through the analysts reports discussing the recent analysts meeting Nike had but walked away with no cle ar guidance. Some viewed Nikes financial targets as besides aggressive, while others saw world-shattering growth opportunities. Because of this, Ford highly-developed her get price reductioned cash draw forecast which showed that at a discount rate of 12%, Nike was overvalued at its modern share price of $42.09. Ford also conducted a degraded sensitivity analysis which revealed Nike was undervalued at discount rates under 11.17%.

Due to time constraints, Ford asked her assistant, Joanna Cohen, to estimate Nikes cost of capital and help Ford determine if Nikes hold is under or overvalued. The following is my own anal ysis of Cohens findings and whether or not I! check up on with them. I. Single or Multiple Costs of Capital I change course with Cohen on her decision to compute scarce one cost of capital for Nike, given the companys various telephone circuit segments. With the exception of one line which makes up only a tiny fraction of fundamental revenues, all business segments are sports related businesses. Therefore I think it is a give out assumption to imagine the risks will not differ...If you want to get a generous essay, order it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay