Question: Consider the valuation of Nike given in Example 10.1. a. Suppose you believe Nikes initial revenue growth rate will be between 7% and 11% (with

Consider the valuation of Nike given in Example 10.1.

a. Suppose you believe Nike’s initial revenue growth rate will be between 7% and 11% (with growth always slowing linearly to 5% by year 2015). 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 weighted average cost of capital 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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a If Initial Revenue Growth Rate can vary between 7 and 11 the stock price can vary between 6682 and 7330 b If Initial Revenue EBIT Margin can vary be... View full answer

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