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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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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About Nike Case 6.1: How to Make Money (D) – Near Automatic Phil Knight and Bill Bowerman started their company with a vision of serving the athlete. That vision was shared by their first employees‚ who were committed to the company but who needed more detailed directions: They needed to know what was appropriate and what wasn’t when it came to conducting company activities. Knight responded by issuing a list of guiding principles at a crucial time in the company’s history. It was 1977‚ and the
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Corporate Finance Nike‚ INC: Cost of capital 1. 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? Definition of WACC (Weighted Average Cost of Capital): WACC is basically the average of the cost of finance (debt and equity). Since a company’s assets can be financed by debt or equity‚ WACC can show the averages of the costs involved in the sources of financing. These costs are then weighted
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Jordan Hirsch AF 495 October 18‚ 2012 Nike Executive Summary Executive summary In this report I will focus on Nike’s Inc. Cost of Capital and its financial importance for the company and future investors. The management of Nike Inc. addresses issues both on top-line growth and operating performance. The company’s cost of capital is a critical element in such decisions and it is important to estimate precisely the weighted average cost of capital (WACC). In my analysis‚ I will examine
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Nike Case Study Table of Contents Part 1 Page Introduction and Overview 3-4 Part 2 Nike Company Information 5-6 Part 3 Nike weaknesses 7-8 Part 4 Ethics and impacts 9-10 Part 5 Conclusion 11 References 12 Nike manufactures and markets sports apparel and equipment on a global scale. They operate in 160 different countries‚ and have revenues of $18
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Nivea Case 1. What is the market’s perception of the Nivea family brand on each of the a ollowing dimensions? a. Performance Nivea decided to create a family of products that symbolically could be represented as the “Nivea universe”. The company had a “mono-product” philosophy which means there would be only one product promising consumers universal application in each product category. b. Imagery Early ads established the image of the Nivea woman as
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The Nike Sweatshop DebateShould Nike be held responsible for working conditions in foreign factories that it does not own‚ but where subcontractors make products for Nike?Nike is definitely not only responsible but also accountable for the working conditions of foreign factories that it does not own which it subcontracts with. Nike should have taken the initiative to be responsible of the contractors/employees working in other countries on a global scale. For example: Recently‚ Pepsi Cola was in
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Nike Case Study Submitted in partial fulfillment of the requirements For Master of Business Administration Degree Tiffin University at University of Bucharest Information and Decision Support Course By Ciprian Jitaru Instructor: Prof. John J. Millar Ph.D. Dean Emeritus and Professor of Management Cohort 9 November 06‚ 2010 1. What external and internal pressures did Mark Parker face when he assumed the leadership of Nike‚ and how did he respond to this challenges?
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Nike Case Answers– Spreading out to stay together 1. When Nike CEO Phil Knight stepped down and handed his job to Bill Perez‚ he stayed on as chairman of the board. In what ways could Knight’s continued presence on the board have created an informal structure that prevented Perez from achieving full and complete leadership of Nike? Answer: Informal structures are the set of unofficial relationships between organization members. Potential advantages of informal structures: ▪ Helping people
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