Corporate Finance Nike‚ INC: Cost of capital 1. What is the WACC and why is it important to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not? Definition of WACC (Weighted Average Cost of Capital): WACC is basically the average of the cost of finance (debt and equity). Since a company’s assets can be financed by debt or equity‚ WACC can show the averages of the costs involved in the sources of financing. These costs are then weighted
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| Factors affecting the efficiency of HR management “Human resources are the most important capital of a company – the vital contact with customers – the key for success” (Tom Farmer‚ 2010). For the successful implementation of the strategic objectives in the field of personnel management is of paramount importance to study the factors affecting productivity‚ timely and full use of reserves growth and improvement
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It’s never easy being a business manager of a large company. There are so tasks and responsibilities that come along with being a business manager. Many people will say that their job is easy and they wish they had it‚ but in reality‚ it’s not that easy. There are so many responsibilities that come with being a business manager. Responsibilities include: the hiring of employees‚ evaluating the employee’s job performance‚ the discipline actions‚ the termination‚ the diversity‚ harassment‚ manager
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Structural Equation Modeling * A Conceptual Overview * The Basic Idea Behind Structural Modeling * Structural Equation Modeling and the Path Diagram A Conceptual Overview Structural Equation Modeling is a very general‚ very powerful multivariate analysis technique that includes specialized versions of a number of other analysis methods as special cases. We will assume that you are familiar with the basic logic of statistical reasoning as described in Elementary Concepts. Moreover‚ we will
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Time Management and Family Issues Upon returning to college‚ the mature student (any student over the age of 24) soon realizes that their ability to manage time effectively directly impacts their learning experience and their family life. Unlike traditional students‚ the mature student may have a spouse‚ children and a full-time job that is necessary for them to survive financially. Adults with families will readily agree that their family alone places serious demands on their time. When adding
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firm’s bond‚ Johanna only used the interest expense of the year divided by the average debt balance‚ which fully ignored the discounted cash flow of the cost of debt. 2. If you do not agree with Cohen’s analysis‚ calculate your own WACC for Nike and be prepared to justify your assumptions. Combining the analysis above‚ we now give our own WACC calculation as following: 2.1 The value of debt(based on EXIHIBIT 3). Since the book value of debt may represent the market value‚ we merely
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ignored.) C8: Using CAPM: KE’=3.2%+0.91*5.5%=8.21% C9: Using DGM formula: P’=D1/ (KE’-g) =1.06*(1+8%)/(8.21%-8%)=$545 In Nike’s case‚ when Joanna Cohen calculated the WACC of Nike‚ she made several mistakes and led to a wrong estimate of the cost of capital. The first mistake comes to the book value of equity used in calculating WD. Nike became a publicly traded company since December 2‚ 1980‚ the share price has changed significantly during 20-year’s time. So‚ the market value of equity should be used
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Nike is a major publicly traded sportswear‚ footwear and equipment supplier based in the US which was founded in 1962 originally know as Blue Ribbon Sports. Nike is the world leader in the manufacturing of sportswear and gear with more than 47 market shares across the global (Nike.com‚ 2011). Nike produces a wide range of sports equipments such as running shoes‚ sportswear‚ football‚ basketball‚ tennis‚ golf‚ etc. Now Nike follows the global fashion trends and is well known and popular in the
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RESEARCH PROJECT – ACCOUNTING II 1. Nike‚ Inc. 2. Nike world headquarters location One Bowerman Drive Beaverton‚ Oregon 97005-6453 3. In 1950‚ before there was the Swoosh‚ before there was Nike‚ there were two visionary men who pioneered a revolution in athletic footwear that redefined the industry. Bill Bowerman who was constantly seeking ways to give his athletes a competitive advantage. and Phil Knight was a talented middle-distance runner from Portland
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acceptable in the workplace and are against policies set forth by the organization’s leaders. When these types of issues occur‚ the organization’s managers need to consistently discipline employees to ensure high worker productivity‚ set certain standards for all employees equally‚ and to comply with the U.S. Sentencing Guidelines (Trevino & Nelson‚ 2007). There are many moral and ethical issues faced by managers when dealing with discipline. Unfortunately‚ some managers have a difficult time disciplining
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