Nike had sales of ($36.397) billion in 2018. Suppose you expected its sales to grow at a

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Nike had sales of \($36.397\) billion in 2018. Suppose you expected its sales to grow at a rate of 10% in 2023, but then slow by 1% per year to the long-run growth rate that is characteristic of the apparel industry—5%—by 2028. Based on Nike’s past profitability and investment needs, you expected EBIT to be 16% of sales, increases in net working capital requirements to be 5% of any increase in sales, and capital expenditures to equal depreciation expenses. If Nike had \($12.997\) billion in cash, \($12.627\) billion in debt, 1,574 million shares outstanding, a tax rate of 25%, and a weighted average cost of capital of 9%, what would have been your estimate of the value of Nike stock in early 2023?

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Fundamentals Of Corporate Finance

ISBN: 9780137852581

6th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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