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It is early 2000's and Nike is facing some issues relative to their financial performance during the last five years of operations. Nike's management team
It is early 2000's and Nike is facing some issues relative to their financial performance during the last five years of operations. Nike's management team is at crossroads in terms of strategic focus, and a portfolio manager - who is watching the effect of these decisions unfold - is interested in investing in Nike's equity when it seems to be "undervalued". Joanna Cohen has been tasked with calculating Nike's Cost of Capital. She presents her work in a memo to her boss, Kim Ford.
- Taking into consideration the information provided by Joanna in her memo, draft a one-page response to Kim, communicating a recommendation regarding the findings and the investment.
- Do you agree with Joanna Cohen's WACC Calculations? Why/why not? Address all WACC inputs, following this formula: WACC = [rd x (1-tax) x (D/V)] + [re x (E/V)]
- Calculate own WACC based on question 1's answer
- Do you recommend Kim Ford investing on Nike's equity? Why/Why not?
- Show me an excel file with the quantitative analysis
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