Nike had sales of $45 billion in 2019. Suppose you expect its sales to grow at a
Fantastic news! We've Found the answer you've been seeking!
Question:
Nike had sales of $45 billion in 2019. Suppose you expect its sales to grow at a rate of 3% forever. Based on Nike’s past profitability and investment needs, you expect EBIT to be 8% of sales, increases in net working capital requirements to be 9% of any increase in sales, and capital expenditures to equal depreciation expenses. Nike pays 20% income tax. The opportunity cost of capital is 7%. Nike has 0.9 billion shares outstanding, $3.3 billion in cash, $1.2 billion in debt.
Calculate the share price for 2020 using the discounted free cash flow model. Round your final answer to one decimal place.
Related Book For
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
Posted Date: