Case note on Nike Cost of Capital Group 2 Members : Devendra Rane‚ Vivekkumar Nema‚ Chandrashekhar Joshi‚ G. Ajithkumar‚ Prakash Shetty Case Background: * NorthPoint Large Cap Fund weighing whether to buy Nike’s stock. * Nike has experienced sales growth decline‚ declines in profits and market share. * Nike has revealed that it would increase exposure in mid-price footwear and apparel lines. It also commits to cut down expenses. * Kimi Ford’s initial assessment at a discount rate
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eliminate graphite costs and reduce power consumption at the Collinsville plant by 15% to 20%. We will evaluate the acquisition of the Collinsville by Dixon at the proposed price. Table 1 identifies the assumptions that have been used for the evaluation of this acquisition. Table 1 Assumptions Reference Laminate Technology reduces power by a mean of 17.5% Laminate Technology is depreciated over 10 years Sodium Chlorate price growth is 8%‚ per annum Power cost (per KWH) growth is
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| Marriott Case | Cost of Capital | | Facts: Dan Cohrs is preparing the annual hurdle rates for the three divisions of Marriot Corporation (Lodging‚ Contracts‚ and Restaurants) which will have a significant impact on the firm’s financial and operating strategies. Marriott’s has been truthful to its operating strategy to remain a premier growth company‚ Marriott’s sales and earnings per share have doubled over the last four years. In 1987 Marriot’s sales rose 24%‚ the return on equity
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information needed for the plan by reviewing financial sheets and documents. In the upcoming project for Pontrelli Recycling the high level cost estimate for the project is $8.8 million. In the following project plan overview‚ the details of the project will be reviewed. Debt and equity financing are two methods that may be employed by a company to obtain necessary capital for projects. Equity financing uses investors to obtain necessary funds. Equity financing does not have to be paid back like a loan
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Operating Working Capital for 2011 is calculated through Taking your Current Assets less – Non-Interest Bearing Current Liabilities NOWC for 2011 = ($5.6 + $56.2 + $112.4) – ($11.2 + $28.1) = $134.9 million. 3. Net Capital for 2011 is calculated the sum of NOWC (already shown as) 134.9 million + Net Fixed Assets (2011 Projected PP&E) of 397.5 = Net Capital for 2011 of = $134.9 + $397.5 = $532.4 million. 4. Free Cash Flow for 2011 is obtained through NOPAT less – Investment in Capital = $65.16 – ($532
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Quiz 2 Corporate Finance NAME ______________________ Apring 2013 2012 70 pts Show all work MC=5pts each 1. Find the EPS (y-axis) // EBIT (x-axis) crossover point of the following two capital structure plans. Complete the table and Draw the graph and show all the points including crossover‚ where line crosses y-axis‚ and the three EBITs below 30pts Assets = $3‚000‚000 Stock Price = $20 Interest Expense = 12% PLAN I D/E = 1.1 Recession Expected
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present value (NPV)‚ internal rate return (IRR)‚ and weighted average cost control (WACC) analysis’. The plan is to incorporate a merger of a high tech furniture business‚ a broker distributer business‚ or the status quo manufacturing. The issues driving these analysis decisions are the facts that a company located in Sonora Mexico relying on inexpensive labor conditions threatened from third party competition. This in of itself is driving up labor costs. The analysis took in the concept of increasing
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technology to be brought into the commercial aerospace market at this time. Boeing has two models for the “Dreamliner‚” the 7E7 Baseline and the 7E7 Stretch‚ a slightly bigger version of the 7E7 Baseline. Both models are said to produce significant cost savings for companies by decreasing the jets fuel consumption by 20% and decreasing the operating expenses by 10%. Based on the seat configurations the Baseline model can seat between 200-300+ passengers and the Stretch can seat between 250-350+ passengers
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wealthy individuals when they started company‚ and they committed a great deal of their own funds to the venture. Their personal funds‚ however‚ were soon exhausted by the extreme and rapid growth of the company. This caused them to have to raise capital from outside resources. The borrowed heavily for a few years until all funds were used. They then turned their sights to issuing both preferred and common equity. SIVMED is organized into 2 divisions: the Clinical Research Division and the Genetic
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COST OF CAPITAL (Et al) EXERCISES 1. Consider the following data regarding the cost of capital of an italian auto manufacturing firm: * Capital structure includes 40% debt * Industry average unlevered beta is 1.8 * 10 year Italian Government bond yield is at 4.5% * JP Morgan has issued an estimate for Expected Market Return at 8.5% * Euribor is 2% * Before tax cost of debt = 5% * Tax rate = 30% Please calculate the weighted average cost of capital (WACC) for
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