Nike had sales of $44.487 billion in 2021. Suppose you expected its sales to grow at a rate of 18% in 2022, but then slow by 3% per year to the long-run growth rate that is characeristic of the apparel industry, 6%, by 2026. Based on Nike's past profitability and investment needs, you expected EBIT to be 18% of sales, increases in net working capital requirements to be 6% of any increase in sales, and capital expenditures to equal depreciation expenses. If Nike had $13.48 billion in cash, $12.81 billion in debt, 1,626 million shares outstanding, a tax rate of 23%, and a weighted average cost of capital of 11%, what would have been your estimate of the value of Nike stock in early 2022.

Answer rating: 100% (QA)

To estimate the value of Nike stock in early 2022 we can use the discounted cash flow DCF valuation ... View the full answer