Estimate of the value of nike stock

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Firm A had sales of $23 billion in 2012. Suppose you expected its sales to grow at a rate of 10% in 2013, but then slow by 0.5% per year to the long-run growth rate that is characteristic of the industry—7.5%—by 2018. Based on Firm A’s past profitability and investment needs, you expect EBIT to be 10% of sales, increases in net working capital requirements to be 10% of any increase in sales, and capital expenditures to equal depreciation expenses. If Firm A had $3.5 billion in cash, $1 billion in debt, 900 million shares outstanding, a tax rate of 25%, and a weighted average cost of capital of 10%, what would have been your estimate of the value of Nike stock in early 2013?

Reference no: EM132039077

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