Consider the following data for Nike $$Inc$.$: In $2022,$ it had $ $47$ comma $660\mathrm{.}00$ million in sales with a $10\mathrm{.}0\%$ growth rate in $2023,$ but then slows by $1\%$ to the$$ long$-$run growth rate of $5\mathrm{.}0\%$ by $2028.$ Nike expects EBIT to be $16\%$ of$$ sales, increases in net working capital requirements to be $5\%$ of any increases in$$ sales, and capital expenditures to equal depreciation expenses. Nike also has $$$$12$ comma $972\mathrm{.}82$ million in$$ cash, $$$$12$ comma $455\mathrm{.}84$ million in$$ debt, $1$ comma $617\mathrm{.}64$ million shares$$ outstanding, a tax rate of $28\%,$ and a weighted average cost of capital of $9\mathrm{.}0\%.$

a$.$ Suppose you believe Nike$\text{'}$s initial revenue growth rate will be between $7\mathrm{.}5\%$ and $12\mathrm{.}5\%($with growth slowing linearly to $5\mathrm{.}0\%$ by year $2028).$ What range of prices for Nike stock is consistent with these$$ forecasts?

b$.$ Suppose you believe Nike$\text{'}$s initial revenue EBIT margin will be between $15\%$ and $17\%$ of sales. What range of prices for Nike stock is consistent with these$$ forecasts?

c$.$ Suppose you believe Nike$\text{'}$s weighted average cost of capital is between $8\mathrm{.}5\%$ and $11\mathrm{.}0\%.$ 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$?$

Question content area bottom

Part $1$

a$.$ Suppose you believe Nike$\text{'}$s initial revenue growth rate will be between $7\mathrm{.}5\%$ and $12\mathrm{.}5\%($with growth slowing linearly to $5\mathrm{.}0\%$ by year $2028).$ What range of prices for Nike stock is consistent with these$$ forecasts?

The range of prices will$$ be:

Highest price per$$ share: $$$ $106\mathrm{.}52.($Round to the nearest$$ cent.$)$

Part $2$

Lowest price per$$ share: $$$$93\mathrm{.}57.($Round to the nearest$$ cent.$)$

Part $3$

b$.$ Suppose you believe Nike$\text{'}$s initial revenue EBIT margin will be between $15\%$ and $17\%$ of sales. What range of prices for Nike stock is consistent with these$$ forecasts?

The range of prices will$$ be:

Highest price per$$ share: $$$