Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following data for Nike Inc : In 2009 it had $19,000 million in sales with a 10% growth rate in 2010, but then

image text in transcribed
image text in transcribed
image text in transcribed
Consider the following data for Nike Inc : In 2009 it had $19,000 million in sales with a 10% growth rate in 2010, but then slows by 1 % to the long-run growth rate of 5% by 2015, Nike expects EBIT to be 10% of sales, increases in net working capital requirements to be 10% of any increases in sales, and capital expenditures to equal depreciation expenses. Nike also has S2.300 million in cash, $32 million in debt, 486 million shares outstanding, a tax rate of 24%, and a weighted average cost of capital of 10%. a Suppose you believe Nike's initial revenue growth rate will be between 7% and 1 1% with growth slo ng linearly to 5% by year 2015 What range of prices for Nike stock is consistent with these forecasts? b. Suppose you believe Nike's initial revenue EBIT margin will be between 9% and 1 1% of sales. What range of prices for Nike stock is consistent with these forecasts? c. Suppose you believe Nike's weighted average cost of capital is between 9.5% and 12%. What range of prices for Nike stock is consistent with these forecasts? d. What range of stock prices is consistent if you vary the estimates as in parts (a), (b), and (c) simultaneously? What range of prices for a. Suppose you believe Nike's initial revenue growth rate will be between 7% and 1 1% with growth slowing linearly to 5% by year 2015 Nike stock is consistent with these forecasts? The range of prices will be Highest price share: S (Round to two decimal places.) Lowest price share: (Round to two decimal places.) b Suppose you believe Nike's initial revenue EBIT margin will be between 9% and 11% of sales. What range of prices for Nike stock is consistent with these forecasts

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance And Public Policy

Authors: Arye L. Hillman

2nd Edition

0521738059, 978-0521738057

More Books

Students also viewed these Finance questions

Question

please dont use chat gpt or other AI 2 9 5 .

Answered: 1 week ago

Question

Analyse the various techniques of training and learning.

Answered: 1 week ago