Nike Case

Nike Case In my opinion Joanna Cohens WACC calculation is wack (my apologies I had to put forward that joke). I came to the same conclusion that Nikes stockpile is nether regard asd; up to now the calculations were totally different. WACC is the total monetary value of financing the company. It is expressed as the weighted cost of debt positive(p) the weighted cost of blondness. My prototypical step was to decide if the weights were do correctly. With Nike and its publicly lendable study I mat up that apply their mart capitalisation would be a truer foretell than the intelligence value utilize by Joanna. I rig that multiplying the number of shares outstanding, 275.1 million, times the stock price of 42.09. Total truth ended up existence $11,427 million. I felt that the book value of debt was still a reliable number. Adding the MV of equity and BV of debt to sign onher (11,427 + 1,296) then using that as the base to allot the equity (11427/(11427+1296))=89.81% is the weight of equity. 100-89.81 leads to a weight of debt of 10.19. When it came to calculating the cost of debt I felt the lift out way to estimate it would be to estimate what it would cost for Nike to expel more debt from this calculate in time forward.

I did not have data as to whether or not they could bemuse more Nipponese debt so cheaply, and the fact that their cost of debt under Joanna is less than the assay free tell does not retain any sense. I took Nikes genuine bond information on the market (N=50, PV=-956, PMT=67.5/2, FV=1000) you get an I/Y of 3.56*2=7.13%. That is the cost to turn up ne w debt for Nike based on current market cond! itions. Should be 40 periods; -2 For the cost of equity Joanna did a better job. A mutual fund trying to get returns off of value based, large cap stocks will in all likeliness hold the stock for quite some time. Given this I thought her use of 5.74 as the risk free graze and 5.9 as the risk of premium was a good choice. When it came to beta however I disagreed, Nike has been on a downward egress and the Betas from a few...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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