Question
Nike had sales of $22 billion in 2022. Suppose you expect its sales to grow at a rate of 9% in 2023, but then slow
Nike had sales of $22 billion in 2022. Suppose you expect its sales to grow at a rate of 9% in 2023, but then slow by 1 % per year to the long-run growth rate that is characteristics of the apparel industry-6%- by 2026. Based on Nike's past profitability an investment needs, you expect EBIT to be 10% of sales, increase in networking capital requirements to be 10% of any increase in sales, and capital expendituresto equal depreciation expenses. If Nike has 2$ billion in cash, $300 million in debt, 500 million shares outstanding, a tax rate of 25%, and a weighted average cost of capital 9%, what is your estimate of the value of Nike's stock in early 2023?
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