Financial Engineering Case Study Written Report NIKE INC.‚ COST OF CAPITAL CASE REPORT Submitted to: Mr. Mieczyslaw Grudzinski Report date: 27 February 2014 BBA Finance & Accounting Semester 6‚ Academic year 2013-2014 Group Member: Tra My Nguyen 24458 Anna Kulishova 24444 Kaihao Zhang 25545 Zakariae Mokhliss 27727 NIKE INC.‚ COST OF CAPITAL CASE REPORT INTRODUCTION Our group was assigned to produce a report on the Nike Inc.: Cost
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standard CAPM approach views risk as high or low depending on whether it is greater or lower than the market beta‚ which is a unit. Keywords: Systematic risk; Beta; CAPM; GARCH ;Volatility; Asymmetry JEL Classification Codes: C10‚ C50‚ G10 1. Introduction How should a rational investor measure the risk of stock market investments? The search for an answer to this question became the major task in financial economics and that led to the development of the Capital Asset Pricing Model (CAPM) which became
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FIN300 Spring 2013 Midterm #1 Study Guide General instructions: 1. This is NOT a comprehensive list of topics that may be covered on your exam. All the lecture material and everything from chapters 1-9 in your textbook (with noted exceptions) is fair game. However‚ it is probably a good idea to emphasize these topics when you study for the test. 2. Understanding the concepts is a prerequisite for succeeding in this course. 3. You should practice solving problems until you feel comfortable you can
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Chapter 8 The Cost of Capital 236 CHAPTER 8—THE COST OF CAPITAL TRUE/FALSE 1. Capital refers to items on the right-hand side of a firm’s balance sheet. 2. The component costs of capital are market-determined variables in as much as they are based on investors’ required returns. 3. The cost of debt is equal to one minus the marginal tax rate multiplied by the coupon rate on outstanding debt. 4. The cost of issuing preferred stock by a corporation must be adjusted to an after-tax
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1. What does it mean if a company “trades at a discount”? Is Amtelecom Group Inc. (AGI) really trading at a discount? If the market value of a stock is lower than its intrinsic value‚ this stock is defined as “trades at a discount”. To figure out whether AGI stock is traded at a discount to comparable companies‚ as its management believed‚ we can simply apply multiple which comes from the average multiple of its comparable companies. Considering fluctuation of future after-tax earnings caused
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Financial management L. Fung AC3059‚ 2790059 2012 Undergraduate study in Economics‚ Management‚ Finance and the Social Sciences This is an extract from a subject guide for an undergraduate course offered as part of the University of London International Programmes in Economics‚ Management‚ Finance and the Social Sciences. Materials for these programmes are developed by academics at the London School of Economics and Political Science (LSE). For more information‚ see: www.londoninternational
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Ace Repair: Q1: A. List: WACC= (%of debt) (after-tax cost of debt) + (% of preferred stock)(Cost of preferred stock) + (% of common equity) (Cost of common equity) =WdRd * (1-T) + WpsRps + WceRs Wd – the weights used for debt‚ Wps – the weights used for preferred equity‚ Wce – the weights used for common equity‚ rd – before-tax cost of debt‚ rps – cost of preferred stock‚ rs – cost of common equity‚ T – marginal tax rate B. Book weight of debt=long-term debt/ total capital=30
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Group Project #1: Buffalo Wild Wings Researched & Compiled by: Cali Lavey Michael Counihan Kilandra Bass Corey Devine Part 1: The first Buffalo Wild Wings began operation in Columbus‚ OH in 1982. With wings‚ beer and sports showcased as the main attractions‚ BWW markets itself as a gathering place for friends‚ family and sports fans alike. With the exception of Rhode Island‚ Buffalo Wild Wings continues to expand both throughout the United States and internationally. The company is currently
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beta of 1.0 tends to have returns which move broadly in line with the market index. A share with a beta greater than 1.0 tends to exhibit amplified return movements compared to the index. For example‚ a company has a beta of 1.55 and according to the CAPM when the market‚ when the market index return rises by say 10 percent the returns on that company shares will tend to rise by 15.5 percent. Conversely if the market falls by 10 percent then the returns on Tarmac shares will tend to fall by 15 percent
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Task 5: Cost of Capital TIP: read your lecture‚ it has a link to an example of computing cost of capital!! http://www.expectationsinvesting.com/tutorial8.shtml AirJet Best Parts Inc. is now considering that the appropriate discount rate for the new machine should be the cost of capital and would like to determine it. You will assist in the process of obtaining this rate. 1. Compute the cost of debt. Assume AirJet Best Parts Inc. is considering issuing new bonds. Select current bonds from
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