Based on this motto, we focus on the following subjects. Cost of capital case study solution contains an 1,100 word answer to the four questions below, a financial analysis in excel that compares joannas financials to the correct financials, and a powerpoint presentation that summarizes the case and walks the audience thru the financial analysis. Because her assumptions such as revenue growth rate, cogs. Cost of capital on july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutual fund. A case study of examining and analyzing weighted average cost. Nike, inc cost of capital case 14 a case brief submitted to submitted by in partial fulfillment of the requirements for date submitted september 28, 2011 summary this case highlights kimi ford, a portfolio manager with northpoint group, a mutualfund management firm. Nike case analysis wacc nike inc case study please enjoy. The american manufacturer, through its marketing strategy which rests on a favorable brand image, has evolved into a large. Nikes share price had declined significantly from the beginning of the year. Case analysis of nike, inc cost of capital find mba. Pdf on july 5 2001, kimi ford, a portfolio manager at northpoint group, a mutualfund. Introduces the weighted average cost of capital wacc. Nike, inc cost of capital on july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutual fund management firm, pored over analyst writeups of nike, inc.
Each group will turn in one report sounds obvious, but might as well make it explicit. Nike inc cost of capital case study essay 917 words. Case 15 provides a wacc calculation that contains errors based on conceptual mistakes in the analysis. Case study on wacc with additional finance youtube. Cost of capital on july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutualfund management. If you do not agree with cohens analysis, calculate your own wacc for nike and. Case number 2 nike incorporateds cost of capital is a vital element when addressing opportunities regarding topline growth and operating performance. Aswath damodaran april 2016 abstract new york university. Provides a wacc calculation, although it has been intentionally designed to mislead students. Nike, inc cost of capital case study cost of capital. The capital asset pricing model capm approach for calculating the cost of equity in the case of nike inc uses a beta of 0. She weights the capital structure using the book value of equity. Read this business case study and over 89,000 other research documents. Case analysis of nike, inc cost of capital apparently, the issue of nikes case is to control and check the calculation cost of capital done by joanna cohen who.
A case study of examining and analyzing weighted average cost of capital in traditional and new approach for calculating the value of firm alireza eskandari international business school ibs, university teknologi malaysia utm 50300 kuala lumpur, malaysia. Integration, incentives and innovation nikes strategy to. This case is mainly dealing with a wellknown company nike inc. Financial analysis and decisions darryl yasinowski. Jan 09, 2017 utilizing the data given in this case, a proper cost of capital will be calculated and from this a case must be made for either the purchase of nike, inc. How nikes marketing strategies helped it become a global brand. Apparently, the issue of nike s case is to control and check the calculation cost of capital done by joanna cohen who is the assistant of a portfolio manager at northpoint group but i am willing to tell you that it can be a complex case in which we can doubt about sensitivity analysis done by kimi ford portfolio manager too. This case is a group project that is due on april 2, before class at 10. Constant innovation has been the byword for nike s success.
Decline in sales, growth, and market share plans to increase exposure in midprice footwear and apparel lines and commits to cut down expenses. Estimating the cost of capital best practices estimating the cost of capital multinational cost me capital and term structure southern homecare cost of capital case 16 nike inc. Essay on nike cost of capital case 1615 words bartleby. Nike s share price had declined significantly from the beginning of the year. Nike, inc cost of capital case study free download as powerpoint presentation. Northpoint large cap fund weighing whether or not to buy nikes stock. Nike over view nike is the ancient greek goddess of victory it is one of the most recognized symbols in the world the swoosh. This case was prepared from publicly available information by jessica chan. Cost of equity capm model capital asset pricing model 9. Nike case study case study on wacc with additional finance question the following is the capital structure of simons company ltd. Case the weighted average cost of capital wacc free essay and over 89,000 other research documents. Conclusion after discounting cash flows provided in exhibit 2 with the calculated wacc of 9.
Nikes share price had declined significantly from the start of the year. Constraints on solution cohen calculated a weighted average cost of capital of 8. Nike is the worlds leader in athletic footwear and apparel. Nike case study analysis by ahmed samir haitham salah magdy essmat magdy mohamed sherif 2.
Weighted average costs of capital wacc is an essential estimation that is needed in order to determine the amount of interest that will be paid for each additional dollar financed. Cost of capital case study solution case study analysis. This is arrived at as the most relevant to be used since it accounts for the variations seen in the past in the corporations betas. The results concluded from the sensitivity analysis made kimi ford unsure of her decision on nike stock. Nike inc cost of capital case study essay graduateway. To calculate the cost of debt, cohen simply divides the interest expense by the average balance of the interestbearing debt.
Mar 24, 2016 question the following is the capital structure of simons company ltd. The firm, naturally, will choose the project which gives a satisfactory return on investment which would in no case be less than the cost of. Nike brand strategy positioning case study if you want to get access to nike brand strategy analysis including brand essence, brand values, brand character, brand archetype and. This case is about the impact of an environmental factor external issue on dividend policy of the firm internal issue.
Nike case study cost of capital equity finance scribd. For full question, visit weighted average cost of capital wacc this video explains the concept of wacc the weighted average cost of capital. Nike inc cost of capital case study essay 916 words cram. Cost of capital cost of capital cost of capital cost of capital at ameritrade. Nike cost of capital case essay examples nike, inc cost of capital on july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutualfund management firm, pored over analysts writeups of nike, inc.
Cost of capital may be used as the measuring road for adopting an investment proposal. What is the wacc and why is it important to estimate a firms cost of capital. Question the following is the capital structure of simons company ltd. This case study analyses the everevolving marketing strategies adopted by nike to become a global brand founded in. Macroeconomic uncertainties part of financial forecasts microeconomic change predictability of disruptive business models cost of capital the challenges of low interest rates, populism, and new technologies guest. Estimating the cost of capital coke versus pepsi 2001 heinz. The company is dealing in different segments which are very much similar with. Introduction kimi ford a portfolio manager at northpoint group which is a mutualfund management firm, is considering to buy some shares from nike, inc even if its share price had declined from the beginning of the year, for the northpoint largecap fund she managed which. Nike case analysis cost of capital beta finance scribd. November23,2016 nike, inc cost of capital prepared by justin nychuk bus 495. Thus, their task is to identify and explain the mistakes in the analysis, which are intended to highlight conceptual issues regarding wacc and its components.
Read the case carefully and present your answers to the following questions. Nike, inc cost of capital case 15 financial administration finc 57180 team 1 fall 20. Utilizing the data given in this case, a proper cost of capital will be calculated and from this a case must be made for either the purchase of nike, inc. Nike inc cost of capital by maria canchola on prezi. This case was prepared from publicly available information by jessica chan, under. Nike inc cost of capital case solution term paper warehouse. The swiss army knife of finance aswath damodaran april 2016 abstract there is no number in finance that is used in more places or in more contexts than the cost of capital. What is the wacc and why is it important to estimate a firm. Explain these mistakes in regard to estimation of the cost of debt, cost of equity and weighted average cost of capital. In corporate finance, it is the hurdle rate on investments, an optimizing tool for capital structure and a divining rod for dividends. Acces pdf nike inc cost of capital case study solution nike inc cost of capital case study solution nike case study weighted average cost of capital wacc a firms weighted average cost of capital wacc represents its blended cost of capital across all sources, including. Buy books, tools, case studies, and articles on leadership, strategy, innovation, and other business.
This pdf is without difficulty known baby book in the world, of course. Case analysis of nike, inc cost of capital case study. However, she had done a quick sensitivity analysis that. Nike is a public company, and its market capitalization is a more relevant metric for equity than the book value of equity. The environmental disaster was hurricane katrina which was caused the huge destruction across the southeastern united states. Cost of capital and cost of equity business finance duration. To do this, not only does a financial analysis need to be completed, but also an industry and company analysis. Each report should have a cover page that contains the following the names of. Project evaluation solved by using beta regressions and weighted average cost of capital wacc comparisons.
This new dimensions in hrd pdf case is a group project that is due on march 28 just before class begins at 10. It sells its products in over 170 countries around the world through 690 nike owned retail stores, about 23,000 retail stores in the us and via independent distributors and licensees. Nike, inc cost of capital case study cost of capital beta. Pdf cost of capital at ameritrade marco fazio academia. If you do not agree with cohens analysis, calculate your own wacc for nike and justify your assumptions.
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