Joanna’s Analysis 1. Single or Multiple cost of capital? The argument provided by Johann Cohen seems appropriate and well-reasoned. Even though Nike Inc. has different segments such as apparel‚ sports equipment’s etc in addition to its athletic shoes‚ all of these essentially make up the sports business and hence‚ it would be safe to assume a uniform cost of capital for Nike Inc‚ neglecting the miniscule contribution of Cole-Haan. 2. Cost of Debt Johanna Cohen has based
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UV0010 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 manufacturer. Nike’s share price had declined significantly from the beginning of the year. Ford was considering buying some shares for the fund she managed‚ the NorthPoint Large-Cap Fund‚ which invested mostly in Fortune 500 companies‚ with an emphasis on value investing. Its top holdings included ExxonMobil
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cost of common equity for the company? [4 marks] b. What is the estimated after-tax cost of debt for the company? [4 marks] c. What is the estimated cost of preferred equity for the company? [4 marks] d. What is the estimated WACC of the company? [4 marks] e. What is the implied long run growth rate of the company’s dividends? [4 marks] Question 2. (20 marks) Your company is considering buying a new factory. The initial cost of the factory is $500‚000‚ but there
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the past few decades. We will begin with an overview of two commonly used approaches that build the foundation of all valuation – the intrinsic valuation and the relative valuation. We will explore two types of discounted cash flow models – the WACC-based approach and the Adjusted Present Value approach. We will also discuss the implementation and limits of the market multiples method‚ and establish the link between the intrinsic and relative valuation. The bulk of the course will be spent
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High or Low Blood Pressure? Purpose: The purpose of this experiment is to compare blood pressure as related to gender and athletic status. Hypothesis: I predict that males have a higher blood pressure than women and athletes have a higher blood pressure than non athletes Background Info: Blood pressure is the amount of force that blood pushes against the inside walls of blood vessels as it passes through. This pressure
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MGMT E 2720 Mergers and Acquisitions Supplemental Case Questions 1. The New York Times a. Why is there so much family control in the newspaper business? b. How did the Sulzberger family manage to retain control on the NYT after it went public? c. How does the NYT dual class structure differ from the one used by Dow Jones‚ prior to its takeover by Rupert Murdoch? d. What explains the behavior of the NYT institutional shareholders – not just Morgan Stanley but also
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and Duke Energy. For the AMD‚ the WACC is 10.83%. For Duck Energy‚ the WACC is 2.76% When we calculate those number‚ we need to know the equity and debt of the company which can easily find on yahoo finance. The cost of debt and the corporate tax rate that we calculated are also based on the data from yahoo finance. We made Beta for the companies with 10 year ranges and use it to calculate return of equity. After we got those number‚ we can calculate the WACC. Advanced Micro Devices Bate—2
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accomplished‚ it brought along different controversies with it. The history of Title IX has shown tremendous changes in women’s athletics. It has created a whole new revolutionary view and thought on both gender’s abilities and rights. Title IX has changed programs and athletics for women in the U.S. ever since its establishment. "Christine Grant‚ the women’s athletic director at the University of Iowa says: It’s clearly the most important thing that has ever happened to women in sports in this
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section 10.9 Adjusting the Cost of Capital for Risk. Safeco Company and Risco Inc are identical in size and capital structure. However‚ the riskiness of their assets and cash flows are somewhat different‚ resulting in Safeco having a WACC of 10% and Risco a 12% WACC. Safeco is considering Project X‚ which has an IRR of 10.5% and is of the same risk as a typical Safeco project. Risco is considering Project Y‚ which has an IRR of 11.5% and is of the same risk as a typical Risco project.
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finding beta‚ cost of debt‚ and cost of equity in order to find weighted average cost of capital‚ or WACC‚ must be calculated using proxy firms and divisional data. The firm’s use of WACC is directed towards analysis of the company’s future capital investments. Specifically‚ firms use it as a discount rate in determining a projects profitability versus the cost of taking it on. A firm-wide WACC is a beneficial tool for determining whether a firm should repurchase shares or buy back equity. On
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