Consider the valuation of Nike given in Example 7.7. a. Suppose you believe Nikes initial revenue growth

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Consider the valuation of Nike given in Example 7.7.

a. Suppose you believe Nike’s initial revenue growth rate will be between 7% and 11% (with growth slowing linearly to 5% by year 2018). What range of prices for Nike stock is consistent with these forecasts?

b. Suppose you believe Nike’s initial revenue EBIT margin will be between 9% and 11% of sales. What range of prices for Nike stock is consistent with these forecasts?

c. Suppose you believe Nike’s WACC is between 9.5% and 12%. What range of prices for Nike stock is consistent with these forecasts?

d. What range of stock prices is consistent if you vary the estimates as in parts (a), (b), and (c) simultaneously?

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Fundamentals of Corporate Finance

ISBN: 978-0321818171

2nd Canadian edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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Question Posted: Jan 05, 2019 12:47 PM

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Consider the valuation of Nike given in Example 7.7. a. Suppose you believe Nikes initial revenue growth

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Plan Value Nike under various assumptions of growth rate and discount rates ...View the full answer

Fundamentals of Corporate Finance

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