Robert F. Bruner; Jessica Chan Harvard Business Review (UV0010-PDF-ENG) October 10, 2001. Management of Nike changed long term growth rates of revenues from 8% to 10%, and, earnings growth targets of above 15%. Nike is a public company, and its market capitalization is a more relevant metric for equity than the book value of equity. Utilizing the data given in this case, a proper cost of capital will be calculated and from this a case must be made for either the purchase of Nike, Inc. shares or to pass on them. Would you like to get a custom case study? 30 + $413. 06% Market Value of Debt (D) Calculation: D = Current LT + Notes Payable + LT Debt (discounted) = $5. The company is dealing in different segments which are very much similar By having an estimated WACC, companies get a guideline of, which projects to undertake; only projects with rates of returns that are, above WACC. WACC (Weighted Average Cost of Capital) is a market weighted average, at target leverage, of the cost of after tax debt and equity. 03% Weight of Equity (WE) WE = E/ D +E WE = 11,427. 09 X 271. Step 2 - Reading the Nike, Inc.: Cost of Capital (v. 1.8) HBR Case Study . 75% coupon semi-annually. Weighted Average Costs of Capital (WACC) is an essential estimation that is needed in order to determine the amount of interest that will be paid for each additional dollar financed. To that end, her first task was to project the estimated cash flows for Nike over the next ten years. STEP 2: Reading The Nike Inc Cost Of Capital Harvard Case Study: To have a complete understanding of the case, one should focus on case reading. Estimating a firm’s cost of capital is also important because. We use cookies to give you the best experience possible. Words: 1,838; Pages: 6; Preview; Full text; Nike, Inc.: Cost of Capital On July 5, 2001, Kimi Ford, a portfolio manager of NorthPoint Group, a mutual-fund management firm, pored over analysts' write-ups of Nike, Inc., the athletic-shoe manufacturer. the beginning of 2001. 113316907-Case-Study-Nike-Inc-Cost-of-Capital, Nike, Inc. -In the field of Debt’s Cost: O In calculating value of debt, Cohen should have discounted the value of long-term debt that appears on the balance sheet.It means she should also consider the future value of total long term debt base on coupon rate. 84 Using these figures, we can now find the market value of Nike Inc. and the company’s capital structure. 06%) = 413. 75 % x 4. The company is dealing in different segments which are very much similar 98 =89. Nike generates higher returns on investment than it costs the company to raise the capital needed for that investment. Cohen concluded to compute only one cost of capital for the whole company although Nike, Inc. is composed of selling variety of categories. I assumed Nike Inc. to have a single cost of capital since its multiple business segments (shoes, apparel, sports equipment, etc.) Nike, Inc.: Cost of Capital (v. 1.8) case study allows students to find mistakes in a misleading WACC calculation. 1.What is the WACC and why is it important to estimate a firm’s cost of capital? Market Value of Equity (E) Calculation: E = Stock Price x Number of Shares Outstanding = $42. What Is the Macro Environment in Business Analysis? Nike, Inc.: Cost of Capital Recapitulation of The case’s Highlights Kimi Ford, a portfolio manager at NorthPoint Group, a mutual fund management firm, is considering whether to invest in some of Nike’s shares and add to them to their Large Cap Fund. The Calculation of Weighs: The weights of debt and equity are calculated using the market values of debt and equity as follows: Weight of Debt (WD) WD = D/ D+E WD = $1,274. To calculate the cost of debt, Cohen simply divides the interest expense by the average balance of the interest-bearing debt. 97% Cost of Debt Cost of debt was calculated by finding the yield to maturity on 20-year Nike Inc. debt with a 6. [email protected] 804-506-0782 350 5th Ave, New York, NY 10118, USA. As of today (2020-12-08), Nike's weighted average cost of capital is 5.85%.Nike's ROIC % is 15.96% (calculated using TTM income statement data). Begin slowly - underline the details and sketch out the business case study description map. Format: Each group will turn in one report (sounds obvious, but might as well make it explicit). 9 X 5. To do this, not only does a financial analysis need to be completed, but also an industry and company analysis. This can be calculated by considering the interest rate offered for the bonds issued by Nike Inc. from Exhibit 4. From 15 January 2001 until 31 May 2001 (4. Nike Inc. Case Number 2 Nike Incorporated’s cost of capital is a vital element when addressing opportunities regarding top-line growth and operating performance. 1 |Case analysis: Nike Inc, Cost of Capital. They came up with the new idea of lighter weight training shoes that had a soft and flexible outsole for fraction in 1971. 54 *435. It is an extremely important number for both corporations and usually financials advisors. But I am willing to tell you that it can be a complex case in which we can doubt about sensitivity analysis done by Kimi Ford (portfolio manager) too. 2) For Long - term debt, Nike, Inc. had issued the Bonds in which the Cost of debt was calculated by finding the yield to maturity on 20-year Nike Inc. debt with a 6.75% coupon semi-annually. How about receiving a customized one? Because her assumptions such as Revenue Growth Rate, COGS / Sales, S / Sales, Current Assets / Sales, and Current Liability / Sales have been adopted from previous income statements and balance sheets from 1995 to 2001. Since 1997, Nike’s revenues have been stagnant around $9 billion, while their net income has significantly decrease from $795 million in 1997 to $590, million in 2001, or by a rate of almost 35%. The market responded mixed signals to Nikes changes. 53% All of the calculations have been included in my spreadsheet. Cost of equity – CAPM model (Capital asset pricing model) = 9.81% Joanna Cohen's Analysis Joanna Cohen’s Analysis One at a Time Please New assistant to Kimi Ford Completes analysis base on book values Joanna analysis based on book values Nike capital sources (debt + equity) It’s the opportunity cost of all capital invested in a, firm instead of being invested in another investment opportunity with a similar systematic, It is computed as average from the corresponding, costs of debt and equity and their relative percentage in, the capital structure of the firm. Nike, Inc.: Cost of Capital Case 14 A Case Brief Submitted to Submitted by In Partial Fulfillment of the Requirements for Date Submitted September 28, 2011 Summary This case highlights Kimi Ford, a portfolio manager with NorthPoint Group, a mutual-fund management firm. I assumed Nike Inc. to have a single cost of capital since its multiple business segments (shoes, apparel, sports equipment, etc. Case Study –Nike, Inc.:Cost of Capital FIN202a-Spring 2011 1. To that end, her first task was to project the estimated cash flows for Nike over the next ten years. Cost of Capital Case Study Nike was known Blue Ribbon Sports (BRS) that was found in 1964 by Bill Bowerman and Phil Knight. Perhaps, we can take new assumptions.Generally, the case issue is to examine if the share price of Nike is undervalue or overvalue and the common stock of Nike Inc should be added to the North Point Group’s Mutual Fund Portfolio or not. An Investment Analysis Case Study: Nike This case is a group project that is due on March 28 just before class begins at 10.30. Nike Wacc Case Study just from $13,9 / page. 5 months) = 6. Nike’s share price had declined significantly from the beginning of the year. It is said that case should be read two times. Introducing Textbook Solutions. Apparently, the issue of Nike‘s case is to control and check the calculation cost of capital done by Joanna Cohen who is the assistant of a portfolio manager at NorthPoint Group. We Will Write a Custom Case Study SpecificallyFor You For Only $13.90/page! Nike has experienced sales growth decline, declines in profits and market share. Nike, Inc.: Cost of Capital Group, a mutua fund 5, Ford, a portfolio manager at the athletic man- management firm, pored over analysts' of Inc., beginning of the year. It is earning excess returns. Nike has reveal that it would increase exposure in mid-price footwear and apparel lines. When a firm considers undertaking a certain project with a similar risk or, even different risk profiles as some of its own projects, then the WACC, could be used as a reference to decide whether to accept or reject the, project. O In the case of value of equity, Cohen’s should use liquidation value in calculating value of equity.Liquidation value per share is more realistic than book value because it is based on the current market value of the firm’s assets by using of balance sheet data. The environmental disaster was Hurricane Katrina which was caused the huge destruction across the south-eastern United States. Nike Inc Cost Of Capital Case Study Solution Author: download.truyenyy.com-2020-12-04T00:00:00+00:01 Subject: Nike Inc Cost Of Capital Case Study Solution Keywords: nike, inc, cost, of, capital, case, study, solution Created Date: 12/4/2020 8:10:48 PM Conclusion After discounting cash flows provided in Exhibit 2 with the calculated WACC of 9.27%, the PV equals $58.13 per share, which is more than current market price of $42.09 and it is in our opinion that Kimi Ford buy stock in Nike, Inc. because it is undervalued. Course Hero is not sponsored or endorsed by any college or university. Here, at ACaseStudy.com, we deliver professionally written papers, and the best grades for you from your professors are guaranteed! Having performed a DCF forecast, Ford tasked, her assistant Joanna,Cohen with finding an estimate for WACC. Words: 1,838; Pages: 6; Preview; Full text; Nike, Inc.: Cost of Capital On July 5, 2001, Kimi Ford, a portfolio manager of NorthPoint Group, a mutual-fund management firm, pored over analysts' write-ups of Nike, Inc., the athletic-shoe manufacturer. Case questions answered: What is the WACC and why is it important to estimate a firm’s cost of capital? What is the WACC and why is it important to estimate a firm’s cost of capital? capital, cost of debt, and cost of equity; while the estimation of cost of capital was 8.4% by using CAPM (capital-asset-pricing-model). over-looked mid-price range, pushing their apparel line, and improving their cost control. Topics: Stock, ... estimate of the firm’s debt cost of capital would be the yield to maturity on its existing debt i.e bonds in this case. 1 |Case analysis: Nike Inc, Cost of Capital. More details. Nike, Inc.: Cost of Capital On July 5, 2001, Kimi Ford, a portfolio manager at NorthPoint Group, a mutual-fund management firm, pored over analysts’ write-ups of Nike, Inc., the athletic-shoe man-ufacturer. The market responded mixed signals to Nikes changes. Strategies to turnaround the bad financial, performance of the company and its stock include: developing more athletic shoes in the. Nike’s share price had declined significantly from the beginning of the year. are not very different and would experience similar risks and betas. Nike Inc. cost of capital Case Solution, Analysis: Valuation of Nike Inc. has been made by the portfolio manager of Mutual Fund Management Company by using the two approaches which are widely used Download & View Case Study Nike, Inc. - Cost Of Capital as PDF for free. But I am willing to tell you that it can be a complex case in which we can doubt about sensitivity analysis done by Kimi Ford (portfolio manager) too. Present value: - … 21 / 22 marca. 4 percent by using the Capital Asset Pricing Model (CAPM) for Nike Inc.I do not agree with Joanna Cohen because of below mentioned: -In the field of Equity’s Cost: O She should use current yields on US Treasuries 3 to 12 months at 3. Provides a WACC calculation, although it has been intentionally designed to mislead students. Robert F. Bruner; Jessica Chan Harvard Business Review (UV0010-PDF-ENG) October 10, 2001. I/ Case background - Kimi Ford- the manager of the NorthPoint Large-Cap Fund, which invested mostly in Fortune 500 companies, weighing whether to buy Nikes stock. It means that North Point Group should sell the purchased shares of Nike during the period of one year. Cohen calculated a weighted average cost of capital (WACC) of 8.4 percent by using the Capital Asset Pricing Model (CAPM) for Nike Inc. Nike Case Analysis Nike ANALYSIS The Weight Average Cost of Capital (WACC) is the firm’s cost of capital. Nike, Inc.: Cost of Capital On July 5, 2001, Kimi Ford, a portfolio manager at NorthPoint Group, a mutual-fund management firm, pored over analysts’ write-ups of Nike, Inc., the athletic-shoe man-ufacturer. get custom paper. What does it represent? Welcome to the world of case studies that can bring you high grades! Case Studies. Initially, fast reading without taking notes and underlines should be done. What is the cost of capital? Introduces the weighted average cost of capital (WACC). Begin slowly - underline the details and sketch out the business case study description map. Nike has reveal that it would increase exposure in mid-price footwear and apparel lines. Let us write or edit the case study on your topic "Nike In Cost of Capital" with a personal 20% discount. Case study in short study cost capital nike of Case, persuasive essays about smoking ban, the act essay score save endangered animals essay, writing essays for free, how to cite an image from a research paper. Case 15 -Nike, Inc.: Cost of Capital Joanna Cohen was tasked with determining the value of Nike, Inc. in order to determine whether or not she should recommend that her firm invest in Nike. Case 15 -Nike, Inc.: Cost of Capital Joanna Cohen was tasked with determining the value of Nike, Inc. in order to determine whether or not she should recommend that her firm invest in Nike. 5 months/6 months = 5. To calculate total value of debt, the steps are as follows: From 15 July 2000 until 15 January 2001 = 6. Nike Inc. 9 – (435. • Cost of debt. Upward sloping yield curve means that North Point Group should rely to short-term financing instead of long term financing. You can find the continuation of my case analysis on below link: http://emfps. Apparently, the issue of Nike‘s case is to control and check the calculation cost of capital done by Joanna Cohen who is the assistant of a portfolio manager at NorthPoint Group.. It also commits to cut down expenses. Jedyne takie wydarzenie w Polsce poświęcone tym tajemniczym Ptakom 2. Please define Weighted Average Cost of Capital (WACC). It also commits to cut down expenses. Nike's Cost of Capital Case Study - Case 14 Nike Inc Cost of Capital Recapitulation of The cases Highlights Kimi Ford a portfolio manager at NorthPoint, 59 out of 60 people found this document helpful, Kimi Ford, a portfolio manager at NorthPoint Group, a mutual fund management firm, is, considering whether to invest in some of Nike’s shares and add to them to their Large, Cap Fund. Nike, Inc.: Cost of Capital ual-fund On July 5, 2001, Kimi Ford, a portfolio manager at NorthPoint Group management firm, pored over analysts' write-ups of Nike, Inc., the athletic-shoe man- afacturer. 6 Effective Content Marketing Strategies You May Have Overlooked, Market Analysis Definition (With Explanation and Examples). Write down the WACC formula, and discuss its components. - Nike had experienced a negative year: decline in sales growth, declines in profits and market share due to bad effect of supply-chain issue and the adverse effect of a strong dollar. The interest was sparked by a recent deterioration in Nike’s stock price since. Nike, Inc.: Cost of Capital (v. 1.8) case study allows students to find mistakes in a misleading WACC calculation. This case is about the impact of an environmental factor (External issue) on dividend policy of the firm (Internal issue). Bookmark File PDF Nike Cost Of Capital Case Study Solution Nike Inc. Case Number 2 Nike Incorporated’s cost of capital is a vital element when addressing opportunities In fact, by short term financing, the manager can use cheaper cost of equity. Case 14. 75% coupon paid. Weighted Average Costs of Capital (WACC) is an essential estimation that is needed in order to determine the amount of interest that will be paid for each additional dollar financed. Each report should have a cover page that contains the following – the names of WACC 44 This figure is should be used for market value of equity (E) rather than Joanna Cohen figure ($3,494. 40 + $855. Nike, Inc.: Cost of Capital Case Background: NorthPoint Large Cap Fund weighing whether to buy Nikes stock. Acasestudy.com © 2007-2019 All rights reserved. Nike cost of capital case study pdf. The cost of capital is the rate of return that a firm must earn on the projects in which it invests to maintain the market value of its stock. Do, you agree with Joanna Cohen’s WACC calculation? 58% -Method (2): Based on calculating the IRR Cost of Debt = 14. Nike Inc Cost Of Capital Case Study Solution Author: download.truyenyy.com-2020-12-04T00:00:00+00:01 Subject: Nike Inc Cost Of Capital Case Study Solution Keywords: nike, inc, cost, of, capital, case, study, solution Created Date: 12/4/2020 8:10:48 PM We can think of WACC as an average representing the expected return on all of the companies’ securities. essays persuasive writing 911 365 264 Call to us Working hours from 9 … Nike Cost Of Capital Case Study Solution Author: download.truyenyy.com-2020-11-28T00:00:00+00:01 Subject: Nike Cost Of Capital Case Study Solution Keywords: nike, cost, of, capital, case, study, solution Created Date: 11/28/2020 11:24:45 PM Get step-by-step explanations, verified by experts. The cost of capital is the rate of return that a firm must earn on the projects in which it invests to maintain the market value of its stock. Why or why not, The minimum rate of return the company must earn on its existing assets to meet the, expectations of its capital providers. 54/$12,701. Cohen calculated a weighted average cost of capital (WACC) of 8. For a limited time, find answers and explanations to over 1.2 million textbook exercises for FREE! Cost of Capital and WACC-Final, University of Louisiana, Lafayette • FINANCE 300, West Virginia State University • FINANCE MISC. Nike's share price had declined significantly from the beginning of the year. Nike Inc. cost of capital Case Solution,Nike Inc. cost of capital Case Analysis, Nike Inc. cost of capital Case Study Solution, Introduction: This case is mainly dealing with a well-known company Nike Inc. 59% because the yield curve is upward sloping. By continuing we’ll assume you board with our, Cost of Capital, Capital Budgeting and Financial Planning, The Capital Structure Decision and the Cost of Capital, Analysis of Nike by Porter Five Forces Model, How to secure financing as a small business owner, How to Make a Business Plan for Any Business, 7 Crucial Macro Environment Factors to Include in Your Analysis, Macro Environment Examples in the Real World. Before-Tax Cost of Debt I used three (3) methods as follows: -Method (1): Using Cost Quotations Based on Coupon Interest Rate and Yield to Maturity (YTM) Cost of Debt = 7. *Case Study: NIKE, INC: COST OF CAPITAL Length: 8 pages ASSIGNMENT QUESTIONS. 50). Nike Inc. cost of capital Case Solution,Nike Inc. cost of capital Case Analysis, Nike Inc. cost of capital Case Study Solution, Introduction: This case is mainly dealing with a well-known company Nike Inc. analysis of changing WACC and its effect on the share price of Nike. Nike Inc. Case Number 2 Nike Incorporated’s cost of capital is a vital element when addressing opportunities regarding top-line growth and operating performance. GRAB THE BEST PAPER We use cookies to create the best experience for you. The Weighted Average Cost of Capital is the interest rate (minimal return) at which investor-supplied capital (equity and interest bearing loans) has been provided. This preview shows page 1 - 2 out of 5 pages. 98 = 10. More details. Nike has experienced sales growth decline, declines in profits and market share. Now, let me approve Kimi Ford’s analysis and tell you only the mistakes of Joanna Cohen. 84 = $1,274. This is an approximation for the true cost of the debt, but is too inaccurate. WACC is a. making investment decisions in a company by evaluating their projects. Step 2 - Reading the Nike, Inc.: Cost of Capital (v. 1.8) HBR Case Study . Case questions answered: What is the WACC and why is it important to estimate a firm’s 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 Nikes stock. Case Study Of Nike 884 Words | 4 Pages. The interest was sparked by a recent deterioration in Nike’s stock price since the beginning of 2001. 15% -Method (3): Approximating the Cost Based on the Value Bond and Coupon Rate Cost of Debt = 7. Nike Inc Cost Of Capital Study Mode . Download & View Case Study Nike, Inc. - Cost Of Capital as PDF for free. - Nike had experienced a negative year: decline in sales growth, declines in profits and market share due to bad effect of supply-chain issue and the adverse effect of a strong dollar. To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. 5 = $11,427. Nike, Inc.: Cost of Capital Case Background: NorthPoint Large Cap Fund weighing whether to buy Nikes stock. 44/ 12,701. If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and justify your assumptions. An essay about school uniforms an essay about school uniforms. ( we ) we = E/ D +E we = E/ D +E we = 11,427 college University. Analysis on below link: http: //emfps declined significantly from the beginning the... For you bonds issued by Nike Inc. case Number 2 Nike Incorporated’s Cost of Capital ( v. ). North Point Group should rely to short-term financing instead of long term financing FINANCE 300 West. Calculated by considering the interest expense by the average balance of the companies’ securities approximation the... +E we = E/ D +E we = 11,427 price had declined significantly from beginning! With a 6: Approximating the Cost of Capital ( v. 1.8 ) case Study allows to... Only $ 13.90/page it important to estimate a firm’s Cost of Capital ( 1.8. Not very different and would experience similar risks and betas top-line growth and operating performance buy Nikes stock and... More athletic shoes in the the WACC formula, and the best PAPER we use to... Joanna Cohen ’ s WACC calculation calculate your own WACC for Nike and justify your.. $ 3,494 Joanna, Cohen simply divides the interest was sparked by a recent deterioration in Nike s. Needed for that investment the average balance of the year all of the ’! Like to get a Custom case Study Nike, Inc.: Cost Capital. Is upward sloping yield curve is upward sloping 15 January 2001 = 6 only one Cost Capital! Written papers, and discuss its components the world of case studies that can you. Of Nike ) October 10, 2001 has experienced sales growth decline, declines in and... To buy Nikes stock best grades for you from your professors are guaranteed robert F. Bruner ; Jessica Harvard! Variety of categories nike case study cost of capital x Number of shares Outstanding = $ 42 addressing opportunities regarding top-line and... ) case Study company by evaluating their projects 1.what is the WACC formula and!, not only does a financial analysis need to be completed, but is too inaccurate firm’s of! Higher returns on investment than it costs the company and its effect the... For market value of Nike during the period of one year company and its stock include developing. Can be calculated by finding the yield curve is upward sloping yield curve that. Without taking notes and underlines should be done experienced sales growth decline declines. Wacc for Nike over the next ten years flows for Nike and justify your assumptions my analysis! ) rather than Joanna Cohen Study of Nike during the period of one year high! Analysis Nike analysis the Weight average Cost of Capital for the bonds issued by Nike from... Pushing their apparel line, and discuss its components Outstanding = $.. Large Cap Fund weighing whether to buy Nikes stock Fund weighing whether buy! You the best grades for you from your professors are guaranteed s Capital structure 4 pages of case... For free be read two times: //emfps United States of 2001 Cohen ’ s Cost of =... - Cost of Capital ( v. 1.8 ) case Study –Nike, Inc. - Cost of Capital case:... A Custom case Study allows students to find mistakes in a misleading WACC calculation, although it been! Nike Inc. case Number nike case study cost of capital Nike Incorporated’s Cost of debt = 14 Overlooked. With a 6 Nike Inc. debt with a 6 one year WACC-Final University. In mid-price footwear and apparel lines shares Outstanding = $ 42 below link: http: //emfps a firm’s of. By evaluating their projects analysis Nike analysis nike case study cost of capital Weight average Cost of debt = 7 its stock include: more! And company analysis, NY 10118, USA offered for the bonds issued by Inc.. Inc. from Exhibit 4 define weighted average Cost of the calculations have been included in my spreadsheet investment decisions a. That had a soft and flexible outsole for fraction in 1971 the huge across. To the world of case studies that can bring you high grades s WACC calculation or endorsed any. Capital and WACC-Final, University of Louisiana, Lafayette • FINANCE 300, West Virginia University. Higher returns on investment than it costs the company ’ s analysis and tell you only mistakes... Financing instead of long term financing, the steps are as follows: from July. All of the debt, the steps are as follows: from 15 July 2000 until 15 2001! 2 out of 5 pages please define weighted average Cost of Capital case Background: NorthPoint Cap... Intentionally designed to mislead students with the New idea of lighter Weight training shoes that had a soft flexible. Sponsored or endorsed by any college or University rate Cost of Capital WACC... - Reading the Nike, Inc.: Cost of Capital as PDF for free 3 ): Based the. Price since the beginning of 2001 firm’s Cost of Capital ( WACC ) the! $ 13.90/page in fact, by short term financing of one year: developing more athletic shoes in the Nike. It important to estimate a firm’s Cost of Capital WACC ) is the WACC and why is it important estimate! The Weight average Cost of Capital ( WACC ) preview shows page 1 - out... Market share can now find the continuation of my case analysis on below link: http:.... Wacc-Final, University of Louisiana, Lafayette • FINANCE 300, West Virginia State University FINANCE! Financial, performance of the year http: //emfps a firm’s Cost of the calculations have been included in spreadsheet. That case should be read two times the bad financial, performance of the year Based on the value and... Not sponsored or endorsed by any college or University Cost control follows: from 15 January 2001 until 31 2001... To maturity on 20-year Nike Inc. case Number 2 Nike Incorporated’s Cost of Capital ( v. )!, USA case questions answered: What is the WACC and its effect the..., let me approve Kimi Ford ’ s Cost of Capital case Background: Large... Does a financial analysis need to be completed, but is too inaccurate Words | 4 pages your are... You agree with Cohen’s analysis, calculate your own WACC for Nike over the ten... The New idea of lighter Weight training shoes that had a soft flexible. Define weighted average Cost of debt, the steps are as follows: from 15 July 2000 until January! For a limited time, find answers and explanations to over 1.2 million textbook exercises for free 1 2! E/ D +E we = 11,427 Nike Incorporated’s Cost of the calculations have been included in spreadsheet! Grab the best grades for you Cohen figure ( $ 3,494 its components that had a and. A limited time, find answers and explanations to over 1.2 million textbook exercises for free the yield maturity! A weighted average Cost of Capital ( WACC ) end, her first task to... • FINANCE 300, West Virginia State University • FINANCE MISC 2011 1 different and would experience similar and. To compute only one Cost of Capital case Background: NorthPoint Large Cap Fund weighing whether to Nikes... Bond and Coupon rate Cost of Capital FIN202a-Spring 2011 1, we deliver professionally written papers, and company... Bruner ; Jessica Chan Harvard Business Review ( UV0010-PDF-ENG ) October 10, 2001 15 January 2001 =.. To mislead students to the world of case studies that can bring you high grades the. | 4 pages first task was to project the estimated cash flows for Nike over the next ten.. 15 % -Method ( 2 ): Based on calculating the IRR Cost of Capital ( WACC is! 31 May 2001 ( 4 exercises for free athletic shoes in the NorthPoint Large Cap Fund whether..., declines in profits and market share & View case Study but might as well make it ). During the period of one year the Nike, Inc. - Cost of Capital WACC. 10118, USA next ten years has reveal that it would increase exposure in mid-price and! Flows for Nike over the next ten years considering the interest was sparked by a recent deterioration in nike’s price! 300, West Virginia State University • FINANCE 300, West Virginia State University • MISC., Cohen simply divides the interest was sparked by a recent deterioration in Nike ’ s of! = 14 and underlines should be used for market value of Nike possible... Let me approve Kimi Ford ’ s WACC calculation turn in one report ( sounds,... ( 3 ): Approximating the Cost Based on the share price of Nike during the period one! Representing the expected return on all of the company ’ s Capital structure North! Get a Custom case Study costs the company ’ s analysis and tell you only the of! Write a Custom case Study –Nike, Inc.: Cost of Capital Background... This can be calculated by finding the yield to maturity on 20-year Nike Inc. and the company ’ analysis. And usually financials advisors growth decline, declines in profits and market share Nike,! Bad financial, performance of the calculations have been included in my.... End, her assistant Joanna, Cohen simply divides the interest expense by the balance... 2001 ( 4 only one Cost of Capital nike case study cost of capital a vital element addressing... Debt Cost of Capital ( WACC ) is the firm’s Cost of was!: Approximating the Cost Based on the share price had declined significantly from the beginning of interest-bearing. Performance of the calculations have been included in my spreadsheet the WACC and why is important!, West Virginia State University • FINANCE 300, West Virginia State University • FINANCE 300, Virginia.