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if possible show the excel formulas Nike had sales of $25.3 billion in 2012 . Suppose you expect its sales to grow at a rate
if possible show the excel formulas
Nike had sales of $25.3 billion in 2012 . Suppose you expect its sales to grow at a rate of 10% in 2013, but then slow by 1% per year to the long-run growth rate that is characteristic of the apparel industry-5% by 2018. Based on Nike's past profitability and investment needs, you expect EBIT to be 10% of sales, increases in net working capital requirements to be 10% of any increase in sales, and capital expenditures to equal depreciation expenses. If Nike has $3.3 billion in cash, $1.2 billion in debt, 893.6 million shares outstanding, a tax rate of 24%, and a weighted average cost of capital of 10%, What is your estimate of the value of Nike's stock in early 2013? (Answer: 50.34) a. b. Suppose you believe Nike's initial revenue growth rate will be between 7% and 11% (with growth always slowing linearly to 5% by year 2018). What range of prices for Nike stock is consistent with these forecasts? (Answer: 46.89 to 51.53) 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? (Answer: 45.18 to 55.5) C. d. 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? (Answer: 36.44 to 55.75) e. What range of stock prices is consistent if you vary the estimates as in parts (b), (c), and (d) simultaneously?|(Answer: 30.69 to 62.98)Step by Step Solution
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