Reference no: EM132466458
Benchmark case:
On June 27th 2019, Nike Inc. had reported sales of $39,117 million in fiscal year 2019.
You expect its sales to grow at a rate of 9% in 2020, at a rate of 8% in 2021, at a rate of 7.5% in 2022.
Thereafter, the growth will level off at its long-run growth rate of 7%. Use the following forecasts to estimate Nike's free cash flows:
- Given the company's recent operating margin, you estimate that Earnings Before Interest and Taxes (EBIT) is 13% of sales every year.
- The depreciation expense is expected to be 1.5% of sales every year.
- Increases in net working capital requirements will be 20% of any increase in sales.
- There are no capital expenditures in any year.
The other assumptions:
- Tax rate is 24%.
- The firm's WACC is 10%.
- Nike has $3464 million in debt, $4466 million in cash, and 1618 million shares outstanding in 2019.
1. By using the free cash flow model, what is the intrinsic value of Nike's stock in June 2019? (Benchmark case)
For the following questions, all assumptions remain the same as the benchmark case.
2. Suppose the firm's WACC is (10.5) %. What is the intrinsic value of Nike's stock in June 2019?
3.Suppose the increase in net working capital will be (21.5 ) % of any increase in sales. What is the intrinsic value of Nike's stock in June 2019?
4. Suppose the firm's long-run growth rate is (6.2) %. What is the intrinsic value of Nike's stock in June 2019?
What will be the market value of rre if the purchase
: What will be the market value of RRE if the purchase if financed with debt?
|
Draft the statement of comprehensive income of Hydan Ltd
: Draft the statement of comprehensive income of Hydan Ltd. for the year ended 31st December. Draft the statement of financial position of Hydan Ltd
|
Develop digital presentation for parents during school event
: For this assignment, take on the role of a teacher in a pre-K classroom. Your preschool is conducting a family event to promote community, state, and national.
|
Advantages of master degree in finance concentration
: What are advantages of master's degree in finance concentration? What are objectives of MBA program in finance concentration in the real-world?
|
What is the intrinsic value of nike stock in june 2019
: On June 27th 2019, Nike Inc. had reported sales of $39,117 million in fiscal year 2019. You expect its sales to grow at a rate of 9% in 2020, at a rate of 8%
|
Dicsuss types of marketing communications that red bull uses
: Summarize the different types of marketing communications that Red Bull uses. Are these "traditional" or nontraditionar?event such as Felix Baumgartner's
|
Write description of public health issues in your community
: To complete this section of your Course Project, write a 1-2-page paper that includes the following: A description of public health issues in your community.
|
Earnings per share for plan a and plan b at ebit
: Estimate earnings per share for Plan A and Plan B at EBIT levels of $800,000, $1,000,000, and $1,200,000.
|
How another characteristic would change your response
: Why the patient is presenting with the specific symptoms described. How another characteristic (e.g. gender, genetics) would change your response.
|