BUSI 408 March 28 - 19:43 Class20 CLASSOBJECTIVES: ,howitiscomputed andhowitisused CASE NIKE(casebook ASSIGNMENT Do

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19:43 3/28/2011  Class 20  CLASS OBJECTIVES :  The purpose of this class is to provide an  overview of the notion of the weighted average cost of capital, how it is computed  and how it is used.  CASE : NIKE  (casebook)    ASSIGNMENT : What is 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? If you do not agree with Joanna’s analysis, calculate your own WACC for Nike  and be ready to justify your assumptions. Calculate the cost of equity using the CAPM, the Dividend Discount Model and  the Earnings Capitalization Ratio. What are the advantages and disadvantages of  each method? What should Kimi Ford recommend regarding an investment in Nike?  Note: Typo in Exhibit 4, Nike Historic Beta:  YTD 06/30/00 should read YTD 06/30/01  Issue Whether or not investing Nike P=sum of CF/(1+R)^T
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This note was uploaded on 05/10/2011 for the course BUSI 408 taught by Professor Zeighamkhokher during the Spring '11 term at University of North Carolina School of the Arts.

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BUSI 408 March 28 - 19:43 Class20 CLASSOBJECTIVES: ,howitiscomputed andhowitisused CASE NIKE(casebook ASSIGNMENT Do

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