CASE 14 NIKE‚ INC.: COST OF CAPITAL Cost of capital denotes the opportunity cost of using capital for a particular investment as oppose to the alternative investment which has similar systematic risk. It is extremely important since it is used in evaluating whether a project is feasible or not in the net present value (NPV) analysis‚ or in assessing the value of an asset. WACC (weighted average cost of capital) is the proportional average of each category of capital inside a firm (common
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ADIDAS GROUP OF COMPANY [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] Adidas Executive Board is composed of four members who reflect the diversity and internationality of the Group: Herbert Hainer The Chief Executive Officer Glenn Bennett Responsible for Global Operations Robin J. Stalker Responsible for Finance Erich Stamminger Responsible for Global Brands
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associated with Nike`s core marketing strategy? Answer: Nike’s Core Marketing Strategy: Nike’s excellence marketing strategies are their energy to achieve their market goals. Nike believes the "pyramid influence" that the preferences of a small percentage of top athletes influence the product and brand choice. So Nike contracted with many athletes’ spokesperson‚ professional teams and college athletic teams to advertise and promote their products to customers. One renowned example of Nike marketing strategy
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NIKE ANALYSIS The Weight Average Cost of Capital (WACC) is the firm’s cost of capital. We can think of WACC as an average representing the expected return on all of the companies’ securities. It is an extremely important number for both corporations and usually financials advisors. Corporations use this number as a minimum for evaluating their capital projects or investments. So if for example the WACC of a firm is 10% and the return on investing in a project is 4.5%‚ then the company would not
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Nike Inc. Case 1. What is the WACC and why is it important to estimate a firm’s cost of capital? WACC is weighted average cost of capital‚ which is the expected rate of return on average from all the company’s existing debts and securities. It takes into account all different types of financing in the company’s capital structure. The reason it is important to estimate WACC is because it measures what it costs the firm to take on a project based on its current Debt and Equity mix. When the
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Marketing Plan for NIKE MM 522 – Keller Gratudate School of Management Executive
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Because of the endorsement all the coaches and the team were required to wear and promote the product. Jim knew of Nike being known for exploiting their workers in places like Indonesia. Jim heard that Nike factory workers were really well paid and were happy to have the jobs they had. Jim wanted to find the truth out for himself about the factory workers of Nike. Jim said‚ “I wanted to know the truth first hand‚ I wanted to see it‚ I wanted to smell it‚ I wanted to hold it in my hand.”
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Nike Inc. Case Number 2 Nike Incorporated’s cost of capital is a vital element when addressing opportunities regarding top-line growth and operating performance. Weighted Average Costs of Capital (WACC) is an essential estimation that is needed in order to determine the amount of interest that will be paid for each additional dollar financed. This translates to be the minimum overall required rate of return that the firm will keep. We disagree with Johanna Cohen’s assessment of Nike due to two
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Integrated Marketing Communication Nike and Liu Xiang: Crisis Management in Celebrity Endorsement Group 3 Shweta Zacharia Kern Rachita Swarooparani Nike * World’s leading supplier of athletic gear * A major sponsor of various global sports events and high-profile athletes and athletic teams * Entered into China in 1980 * Considered to be the ‘coolest’ brand in China- success due to clever marketing Liu Xiang * One of Nike’s most important brand ambassadors in
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Joanna Cohen’s WACC calculation because she mistakenly used historical data to estimate the future cost of debt. Joanna calculated the cost of debt by taking the interest expense for 2001 and dividing it by the average debt balance. The cost of debt for Nike is the effective rate that it pays on its current debt‚ meaning the yield to maturity of bonds should be used to make an estimate instead of the average debt balance. Through the use of past data‚ the average balance of debt‚ the 4.3% before-tax cost
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