Calculate the levered and unlevered price-to-book ratios

Reference no: EM131491172

Question: Residual Operating Income Valuation, Nike, Inc., 2004 {Medium) At the end of its 2004 fiscal year, the 263.1 million outstanding shares of Nike, Inc., traded at $75 each. The following summary numbers are from the 2004 financial report (in millions of dollars).

a. Calculate the levered and unlevered (enterprise) price-to-book ratios at which Nike traded at the end of fiscal year 2004.

b. Calculate residual operating income for 2004 using beginning-of-year balance sheet amounts. Use a required return of 8.6 percent: for operations.

c. Calculate return on net operating (RNOA) assets for 2004.

d. With this RNOA, forecast operating income and residual operating income for 2005.

e. Calculate the value of a Nike share if the residual operating income you forecasted for 2005 is expected to grow at a 4 percent annual rate after 2005.

Reference no: EM131491172

Questions Cloud

How muslims and hindus interacted during its reign : Identify this empire and describe how Muslims and Hindus interacted during its reign. Also, describe how this relationship changed from the beginning.

Calculate dell residual operating income for the year : Calculating Residual Operating Income: Dell, Inc. {Medium) Dell, Inc., reported after-tax operating income of $2,6 18 million for fiscal year 2008.

Establish a wbs to support the project with revised schedule : Establish a WBS to support the project with the revised schedule. Suggest the primary measures that you would use in order to successfully deliver the project.

European exploration of north america : Why did the Monarchy continue to support explorers who did not bring back large amounts of gold and spices?

Calculate the levered and unlevered price-to-book ratios : Residual Operating Income Valuation, Nike, Inc., 2004 {Medium) At the end of its 2004 fiscal year, the 263.1 million outstanding shares of Nike, Inc.

Given that business operations have changed from the market : Given that business operations have changed from the market structure specified in the original scenario in Assignment 1, determine two likely factors.

Differences in male and female experience of loneliness : According to Sex and Gender: An Introduction, one study reported qualitative differences in male's and female's experience of loneliness

What is the effect on the risk that the shareholders bear : Stock Repurchases: Expedia, Inc. (Medium) In June 2007, the Web travel firm Expedia, Inc., announced that it would buy back as much as 42 percent of its shares.

Under what conditions is this a good forecast : A valuation that simply capitalizes a forecast of operating income for the next year implicitly assumes that residual operating income will continue.

User Account

All Pages