Case ID: UVAF1353     Solution ID: 22127     Words: 1368 Price $ 75

Nike Inc Cost of Capital Case Solution

Case Solution

This is a Darden logical examination. Presents the weighted ordinary cost of capital (WACC). Gives a WACC calculation, notwithstanding the way that it has been intentionally planned to mislead undergraduates/graduates. Along these lines, their errand is to perceive and explain the "blunders" in the examination, which are relied upon to feature connected issues concerning WACC and its fragments. Such aluminium is normally misconstrued by undergraduates/graduates. Expect that undergraduates/graduates have been displayed to the WACC, CAPM, the benefit refund model, and the salary capitalization model.

Excel Calculations

WACC - CAPM

Dividend Discount Model

Earnings Capitalization Ratio

Questions Covered

What is the WACC and why is it important to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not?

If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and be prepared to justify your assumptions.

Calculate the costs of equity using CAPM, the dividend discount model, and the earnings capitalization ratio. What are the advantages and disadvantages of each method?

What should Kimi Ford recommend regarding an investment in Nike?