CASE STUDY AND EXCEL !
Read the case study AND PLEASE SOLVE QUESTION 1 ,2,3,,5 I post files one of them has the questions HOWEVER QUESTION 3 WILL BE NEEDED TO BE SOLVE IN EXCEL AND WORD I POSTED A SAMPLE WHICH IS "Nike Sample answers which has the answers but not all of them are right SO DO NOT COPY AND PASTE EVERYTHING FROM THE SAMPLE I WANT MY ANSWERS TO BE AS THE SAME "STRUCTURE"PLEASE CHECK THE SAMPLE AND YOU WILL UNDERSTAND ,, SO I NEED WORD DOCUMNET AND EXCEL AND POWERPOINT WHEN YOU ARE DONE YOU WILL ALSO HAVE SAMPLE OF ALL MY REQUIREMENT PLESE DO NOT COPY FROM THE SAMPLE EVERYTHING AND IF YOU WILL TAKE SOME PLEASE REPHRASE IT !
CASE ASSIGNMENT #2
Case 15 In the Text Book (PAGE 235)
NIKE, INC.: COST OF CAPITAL
This case is intended to serve as an introduction to the calculation of the weighted-
average cost of capital (WACC) of the firm.
The case provides a WACC calculation and analysis which may have been conducted
properly or may contain some gaps and/or errors. The task of the student is to critically review
the analysis done by Joanna Cohen and provide their comments on it. If the student (or students
in the group) do not agree with Joanna they must explain the reasons and provide their own
analysis.
The case assumes that students have been exposed to the WACC, CAPM, the dividend
discount model, and the earnings capitalization model.
Questions
1. What is the WACC and why is it important to estimate a firm’s cost of capital? What does it represent? Is the WACC set by investors or by managers?
2. Do you agree with Joanna Cohen’s WACC calculation? Why or why not?
3. If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and justify your assumptions.
4. Calculate the costs of equity using CAPM, the dividend discount model, and the earnings capitalization ratio. What are the advantages and disadvantages of each
method? Which method is best for calculating the cost of equity? Which of these
methods be most appropriate particularly for Nike and why?
5. What should Kimi Ford recommend regarding an investment in Nike?
Dina Alamoudi