Ford was considering buying some shares for the fund she managed, the NorthPoint Large-Cap Fund, which invested mostly in Fortune 500 companies, with an emphasis on value investing. This section does not cite any sources. Nike Inc. tries a new strategy to revitalize the company by focusing on top-line growth and operating performance. • Cost of debt. The cost depends on the health of the company's balance sheet—a triple AAA rated firm can borrow at extremely low rates vs. a speculative company with tons of debt, which may have to pay 15% or more in exchange for debt capital. Thus, the meeting showed that Nike Inc. experienced some difficulties during the past years. Capital Structure Ltd. is an independent provider of news on and analysis of the European sub-investment grade space. (2010)); has become a phenomenon that is seen across the globe. These reasons are considered the effect of capital structure to cost of capital, investment decisions, firm value, and share price of a company, which may affect to the value and cost of capital by changing the capital 2 |Case analysis: Nike Inc, Cost of Capital. Lee is a Masters in Management graduate who has been working as a freelance writer and researcher since 2009.For Beta, I used the most recent beta estimate, 0.69. The result of our analysis suggests that it is a sound financial decision to include Nike Inc. to NorthPoint Group’s mutual fund portfolio.No HTML is allowed in comments, but URLs will be hyperlinked. When thedecision to make while looking at Nike Inc. financials: whether Kimi should buy Nike shares or not for the fund Group she was working for. 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. Social media and advertising cookies of third parties are used to offer you social media functionalities and personalized ads. Nike was founded on January 25, 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight. Comments are not for promoting your articles or other sites.With WACC at 9.95 percent, I recomputed the enterprise value and equity value per share of Nike. A firm’s WACC shows the required return on the firm and is used by the firm’s decision makers to determine which expansionary opportunities and or mergers to take. We disagree with Johanna Cohen’s assessment of Nike due to twoCase Analysis of Nike, Inc.: Cost of Capital 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. [See Annex A for details of computation.]
To conclude, since the data shows that Nike Inc.’s common stock is undervalued NorthPoint Group should add Nike Inc. to its Large Cap Fund.Using the above values, the WACC is computed as follows:As a user in the EEA, your approval is needed on a few things. Kimi needed to consider all aspects of Nike Inc. financial position. They came up with the new idea of lighter weight training shoes that had a soft and flexible outsole for fraction in 1971. What does it represent? Nike has various products which include footwear as well as other apparel that compliment the former. On July 28,2011 Nike Inc. held a analyst’s meeting to disclose their fiscal year 2001 as well as to revitalize the company who wasn’t performing well. Businesses large and both small are able to compete, produce, and sell their products without limits to either demographic or geographic factors. This accounts for 92 percent of the company’s revenue. Nike Inc. Case Number 2 Nike Incorporated’s cost of capital is a vital element when addressing opportunities regarding top-line growth and operating performance. This translates to be the minimum overall required rate of return that the firm will keep. The other 8 percent comes from equipment and non Nike brand products, such as Cole13/3/2013Nike, Inc.Cost of Capital1Discussion Questions• What is the WACC and why is it important to estimate a firm’s costof capital? As such, I believe that the most relevant beta in this respect is 0.69.HubPages Inc, a part of Maven Inc.Kimi Ford should recommend to the NorthPoint Group Board that acquiring Nike Inc. shares is a SOUND INVESTMENT. Nike, Inc. is a Growth Company. Its top holdingsCase Study NikeIntroductionGood morning ladies and gentlemen and thank for taking the time to meet with us. As such, the cost of capital is a critical factor in decision-making and in estimating the weighted average cost of capital (WACC).
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