Consider the following data for Nike. Nike had sales of

$25,300

million in

20122012.

Nike expects its sales to grow at a rate of

1010%

in

20132013

but then slow by

1 %1%

to the long-run growth rate that is characteristic of the apparel industry,

55%,

by

20182018.

Based on Nike's past profitability and investment needs, you expect EBIT to be

1010%

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

$3.3

billion in cash,

$1.2

billion in debt,

893.6

million shares outstanding, a tax rate of

24%,

and a WACC of

10%

a. Suppose you believe Nike's initial revenue growth rate will be between

7 %

and

11 %

(with growth slowing linearly to

55%

by year

2018

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

11 %

of sales. What range of prices for Nike stock is consistent with these forecasts?

c. Suppose you believe Nike's WACC 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?