issues with Cohen’s calculation‚ and then analyze an new WACC to decide whether we should invest in Nike Inc. Many issues should be addressed regarding Joanna Cohen’s WACC calculation. First‚ to calculate the debt cost of capital‚ Cohen divided the total interest expense by the company’s average debt balance. This is an issue because she did not take into account the current yield on publicly traded Nike debt. Another issue that should be addressed is the calculation of the equity cost of capital. Using
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analysis assumes Nike debt is trading at par – it is not ▪ Equity should be based on market value‚ not book value ▪ Hence total will be based on market cap.‚ not balance sheet ▪ Her debt cost is wrong ▪ She should use the current or projected cost rather than a historic one ▪ i.e. use a Bloomberg terminal (other terminals are available) to research yields on debt of the same credit rating as Nike ▪ It is unlikely Nike has a cost of
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NIKE‚ INC.: COST OF CAPITAL On July 5‚ 2001‚ Kimi Ford‚ a portfolio manager at NorthPoint Group‚ a mutual-fund management firm‚ pored over analysts ’ write-ups of Nike‚ Inc.‚ the athletic-shoe manufacturer. Nike ’s share price had declined significantly from the beginning of the year. Ford was considering buying some shares for the fund she managed‚ the NorthPoint Large-Cap Fund‚ which invested mostly in Fortune 500 companies‚ with an emphasis on value investing. Its top holdings
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NIKE‚ INC.: COST OF CAPITAL Professor Meiberger By Sebastian Gomez Team 5 Cohort: Front The portfolio manager for NorthPoint Group‚ Kimi Ford was deciding if she should pitch in and draw Nike within NorthPoint Large-Cap Fund. Nike‚ which did not have the strongest fiscal year results in 2001‚ was implementing new strategies to heighten its revenue and income. Kimi Ford‚ after having carefully read reports by analyst‚ and their input within this publicly traded company decided to emphasize
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Howard V. Perlmutter (1985)‚ "Strategic Planning for a Global Business‚" Columbia Journal of World Business‚ 20 (2)‚ 3-10. DeTienne‚ Kristen and Lee Lewis (2005)‚ "The Pragmatic and Ethical Barriers to Corporate Social Responsibility Disclosure: The Nike Case‚" Journal of Business Ethics‚ 60 (4)‚ 359-376. Devlin‚ Godfrey and Mark Bleackley (1988)‚ "Strategic Alliances--Guidelines for Success‚" Long Range Planning‚ 21 (5)‚ 18-23. Dussauge‚ Pierre and Bernard Garrette (1999)‚ Cooperative Strategy: Competing
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Life Style Inventory (LSI 1) GM 591 Organization and leadership behavior March 23‚ 2004 There is one subject we don’t study in school‚ but it is the one subject that is essential to your own happiness and quality of life. That subject is YOU! The LSI authors describe the instrument in this way: “Depending on how you choose to use them‚ your thoughts can be your strongest allies or your worst enemies. The LSI enables you to examine your own unique way of thinking and how it influences your
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Supportive and Transformational Leadership Styles in a Healthcare Environment Dianne Conforte Current Issues in Leadership MBA595 April 25‚ 2010 Introductory Section Supportive organizations and exceptional individual contributions set the stage for effective teamwork. Healthcare teams require a clear purpose that integrates specific analytical groups and multiple facets of patient care. “Healthcare teams which have a clear purpose that is consistent with the organizations’ mission‚ can be more
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Lessons I have learned from this interview with Ronald G. Spaeth‚ as a graduate student in healthcare administration by reading about Mr. Spaeth’s education‚ awards and career accomplishments. For instance‚ Spaeth received a Gold Medal Award for his outstanding contributions as a leader in healthcare. I have learned that receiving a great award can start a successful career. Though‚ receiving an award is a part of career success. Completing an earned degree in business administration‚ and/or another
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we used market value based on the share price of Nike on July 5‚ 2001and number of shares outstanding‚ which resulted in the weights of debt and equity of 10.2% and 89.8% respectively (see Exhibit 2). Cost of Debt: Cost of debt was calculated by Ms. Cohen by finding the historical interest rate of 2.7% and tax rate of 38%. We agree with her estimation of the tax rate of 38%‚ but calculated a cost of debt of 7.17% based on the market price of Nike bonds and finding their yield to maturity (see Exhibit
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the most influential of all the city states and they practiced democracy (Brand‚ n.d‚ p. 1). All other “poleis” however used other forms of government strategies although Sparta did practice other forms‚ other than democracy. Five types of leadership styles will be discussed which are; monarchy‚ aristocracy‚ tyranny‚ oligarchy and democracy. According to the Duhaimes Law Dictionary (n.d) monarchy is defined as “a form of government in which law making power is given to a single person‚ usually holding
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