Consider the following data for Nike Inc.: In 2009 it had $19,100 million in sales with...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider the following data for Nike Inc.: In 2009 it had $19,100 million in sales with a 10% growth rate in 2010, but then slows by 1% to the long-run growth rate of 5% by 2015. Nike expects EBIT to be 10% of sales, increases in net working capital requirements to be 10% of any increases in sales, and capital expenditures to equal depreciation expenses. Nike also has $2,300 million in cash, $32 million in debt, 486 million shares outstanding, a tax rate of 24%, and a weighted average cost of capital of 10%. a. Suppose you believe Nike's initial revenue growth rate will be between 7% and 11% (with growth 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 d. What range of stock prices is consistent if you vary the estimates as in parts (a), (b), and (c) simultaneously? consistent with these forecasts? a. Suppose you believe Nike's initial revenue growth rate will be between 7% and 11% (with growth slowing linearly to 5% by year 2015). What range of prices for Nike stock is consistent with these forecasts? The range of prices will be: Highest price share: $ (Round to the nearest cent.) Lowest price share: $ (Round to the nearest cent.) 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? The range of prices will be: Highest price per share: $ (Round to the nearest cent.) Lowest price per share: $ (Round to the nearest cent.) 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? The range of prices will be: Highest price per share: $. (Round to the nearest cent.) Lowest price per share: $ (Round to the nearest cent.) Activate Wi Consider the following data for Nike Inc.: In 2009 it had $19,100 million in sales with a 10% growth rate in 2010, but then slows by 1% to the long-run growth rate of 5% by 2015. Nike expects EBIT to be 10% of sales, increases in net working capital requirements to be 10% of any increases in sales, and capital expenditures to equal depreciation expenses. Nike also has $2,300 million in cash, $32 million in debt, 486 million shares outstanding, a tax rate of 24%, and a weighted average cost of capital of 10%. a. Suppose you believe Nike's initial revenue growth rate will be between 7% and 11% (with growth 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 d. What range of stock prices is consistent if you vary the estimates as in parts (a), (b), and (c) simultaneously? consistent with these forecasts? a. Suppose you believe Nike's initial revenue growth rate will be between 7% and 11% (with growth slowing linearly to 5% by year 2015). What range of prices for Nike stock is consistent with these forecasts? The range of prices will be: Highest price share: $ (Round to the nearest cent.) Lowest price share: $ (Round to the nearest cent.) 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? The range of prices will be: Highest price per share: $ (Round to the nearest cent.) Lowest price per share: $ (Round to the nearest cent.) 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? The range of prices will be: Highest price per share: $. (Round to the nearest cent.) Lowest price per share: $ (Round to the nearest cent.) Activate Wi
Expert Answer:
Answer rating: 100% (QA)
Formula Time n 0 1 2 3 4 5 year 2009 2010 2011 2012 2013 2014 Growth rate g 10 9 8 7 6 sn11g sales 1... View the full answer
Related Book For
Financial and Managerial Accounting
ISBN: 978-0132497978
3rd Edition
Authors: Horngren, Harrison, Oliver
Posted Date:
Students also viewed these accounting questions
-
Consider the following data for a manufacturer: Requirement 1. Compute cost of goods manufactured and cost of goodssold. End of Year Beginning of Year Direct materials inventory Work in process...
-
Consider the following data for three different companies: The patterns of cash flows for these firms differ. One firm is a growth firm that is expanding rapidly, another firm is in danger of...
-
Consider the following data for a one-factor economy. All portfolios are well diversified. Suppose that another portfolio, portfolio E, is well diversified with a beta of .6 and expected return of...
-
On average, which group of borrowers would have to pay a higher effective rate for its short-term loans, those who are required to put up collateral or those who are not? Explain.
-
Explain the different ways in which eukaryotic transcription elongation is controlled.
-
Try presenting the following speech to your group. Take it in turns, adopting different tones: the first speaker could adopt a tone that is enthusiastic and committed; the second, sceptical and...
-
Show that the pure shrinkage estimator (Problem 9.25) is the solution to Data From Problem 9.25 The pure shrinkage estimator is defined as \(\hat{\beta}_{s}=c \hat{\beta}\), were \(0 \leq c \leq 1\)...
-
The condensed financial statements for OIL Inc. and ERS Company for the year ended December 31, Year 5, follow: On December 31, Year 5, after the above figures were prepared, OIL issued $240,000 in...
-
Additional Information a. Raw Materials Inventory has a March 31 balance of $81,600. b. Raw materials purchases in April are $504,000, and total factory payroll cost in April is $367,000. c. Actual...
-
Candy Craze purchased and installed a machine on January 1, 2023, at a total cost of $296,800. Straight-line depreciation was taken each year for four years, based on the assumption of a seven-year...
-
"What is the role of delegation in talent management and succession planning? Additionally, what strategies can be employed for delegating developmental assignments, stretch goals, and leadership...
-
The figure below shows a mechanical assembly consisting of a horizontal piston-cylinder assembly that contains a pressurized gas with a pressure larger that the atmospheric pressure, Patm = 1.105....
-
A joint which is part of a loaded framework is shown below. The joint carries a vertically downward load of 11kN as shown and the horizontal force in OP is 6kN acting towards O. Give your answers to...
-
The following three ply glass fiber/ epoxy configuration [0/45/90], is subjected to a load (stress resultants) of Nx = Ny=1200 N/m. (each ply has fiber volume fraction of 0.6) Note that (Nxy=0 N/m...
-
The following methods are standard ways of fault finding Programmable Logic Controller (PLC) programs: i. Watchdog timers Last output set ii. iii. Replication checks iv. Expected value checks Briefly...
-
25. A Carnot power cycle employing 1 lb of air as a working substance is presumed to operate between temperature limits of 600F and 70F. The pressure at the beginning and end of the isothermal...
-
Roseanne's hourly wage is $20 and she works 35 hours per week. What is Roseanne's monthly Gross Salary? $3200 $3467 $3033
-
Design and describe an application-level protocol to be used between an automatic teller machine and a bank's centralized computer. Your protocol should allow a user 's card and password to be...
-
Everyday Hardware Consultants purchased a building for $540,000 and depreciated it on a straight-line basis over a 40-year period. The estimated residual value is $96,000. After using the building...
-
A table of notes receivable for 2012 follows: Requirement 1. For each of the notes receivable, compute the amount of interest revenue earned during 2012. Use a 360-day year, and round to the...
-
To prepare the statement of cash flows, accountants for I-M-Mobile, Inc., have summarized 2012 activity in the Cash account as follows: Requirement 1. Prepare I-M-Mobiles statement of cash flows for...
-
In the 1970s, Special Electric Company brokered the sale of crocidolite asbestos, which is the most toxic form of asbestos, to Johns- Manville Corporation. Special Electric never held possession of...
-
On January 2, 2018, The Register, a science and technology news site based in Britain, published an article revealing the existence of two major bugs leaving virtually all computers and smartphones...
-
Plaintiffs W. O. and J. C. Lucy had wanted to purchase Ferguson Farm from the Zehmers for at least eight years. One night, Lucy stopped by the establishment the Zehmers operated and said that he bet...
Study smarter with the SolutionInn App