Given the data below provided by a financial analyst for Nike Inc., calculate the value of Nikes
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Question:
Given the data below provided by a financial analyst for Nike Inc., calculate the value of Nike’s stock in 2015 and 2021, respectively, using the Gordon (constant) Growth Dividend Discount Model: D^1/(r-g). Show your calculations and round your answers to two decimal places. Do you think Nike’s strategic development during 2015-2021 was successful in terms of the change of its stock prices from 2015 to 2021? Explain.
2015 | 2021 | |
This year’s dividend per share, D0 | $0.54 | $1.07 |
Constant growth rate expected for dividends (in perpetuity), g | 7.34% | 10.00% |
Constant cost of equity for Nike Inc., r | 8.48% | 10.86% |
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