Nike‚ Inc.: Cost of Capital Case 15 Financial Administration FINC 5713-180 Team 1 Fall 2013. October 8‚ 2013. Introduction Kimi Ford a portfolio manager at NorthPoint Group which is a mutual-fund management firm‚ is considering to buy some shares from Nike‚ inc even if it’s share price had declined from the beginning of the year‚ for the Northpoint Large-cap fund she managed which invested mostly in Fortune 500 companies and it was doing well despite the decline
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Wall Street is evil and corrupt… or at least that’s all I hear from news headlines and organizations like Occupy Wall Street. After consistently hearing about corrupt brokers and managers like Bernie Madoff and Jordan Belfort‚ I began to buy into this facade. I enjoyed following the stock market‚ but I didn’t want to pursue it as a career out of fear of social repercussions. Last summer‚ this all changed. A few of my friends and I were awarded a free trip to Washington D.C. for placing fifth in a
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Wolf of Wall Street The Wolf of Wall Street is a film based on Jordan Belfort‚ a stockbroker who at a young age after becoming licensed‚ mastered the art of money laundering. Within his profession of a stockbroker‚ he quickly uses his skills of lying and manipulation to talk people into buying large amounts of penny stocks. Shortly after‚ he decides to open up his own stock company with friends who he has specifically chosen to build what comes to be one of the largest companies on Wall Street
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order to completely analyze Nike and its possible place in the NorthPoint Large-Cap Fund‚ Ford needs to know Nike’s cost of capital. One of the most useful ways to measure the cost of capital is the weighted average cost of capital (WACC). Theoretically‚ the optimal capital structure in the mix of types of financing that produces the lowest WACC. WACC is calculated by multiplying the cost of each type of financing a company uses‚ be it debt or the many types of equity‚ by their respective weights. It
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paper will look at the three most common models used for estimating the rate of return for a given company; dividend growth‚ Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT). The board of directors for Apple Computer Corporation will receive this report‚ and based on the findings and analysis included‚ Apple will be given a recommendation as to the cost equity model they should implement to estimate their future rate of returns. This report will discuss the accuracy and ease
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these questions) Day 1 1. Identify the cost of capital and estimate the cost of placing an order. Assume that the annual inventory cost of a unit is given by‚ CH = iCI‚ where i is the cost of capital and CI‚ the unit cost of the item. 2. Consider the connector data and the all unit price structure described in Table 1. For each price level ($5.00‚ $4.75‚ etc.) determine the EOQ‚ and the corresponding total annual cost. Sketch the total annual cost as a function of the order quantity. Based on
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Business Association October 9th‚ 2014 Movie Review Number 1 Wall Street (1987) After watching “Wall Street (1987)” I learned of several dilemmas stockbrokers‚ such as Bud Fox and Gordon Gekko‚ encounter in the pursuit of wealth. First‚ Bud was faced with the difficult dilemma of whether he should do what’s best for his career or what’s best for his father. Bud’s father worked his entire life for a small airline company‚ but Bud’s Boss‚ Gordon Gekko‚ desired to take over the airline
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Wall Street The movie "Wall Street" is a representation of poor morals and dissapointing business ethics in the popular world of business. This movie shows the negative effects that bad business morals can have on society. The two main characters are Bud Fox played by Charlie Sheen and Gordon Gekko played by Michael Douglas. Bud Fox is a young stockbroker who comes from an honest working-class family but on the other hand‚ Gordon Gekko is a millionaire who Bud admires and wants to be associated
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does Marriott use its estimate of its cost of capital? Does this make sense? Marriott has defined a clear financial strategy containing four elements. To determine the cost of capital‚ which also acted as hurdle rate for investment decision‚ cost of capital estimates were generated from each of the three business divisions; lodging‚ contract services and restaurants. Each division estimates its cost of capital based on: Debt Capacity Cost of Debt Cost of Equity All of the above are calculated
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Average Cost of Capital What It Measures The weighted average cost of capital (WACC) is the rate of return that the providers of a company’s capital require‚ weighted according to the proportion each element bears to the total pool of capital. Why It Is Important WACC is one of the most important figures in assessing a company’s financial health‚ both for internal use (in capital budgeting) and external use (valuing companies on investment markets). It gives companies an insight into the cost of their
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