Lecture_15_ - 2-1Lecture#15Suggested Questions for...

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Unformatted text preview: 2-1Lecture#15Suggested Questions for CASE#2:Nike Inc.: Cost of CapitalMini Case: STEPHENSON REAL ESTATE RECAPITALIZATION2-2Suggested Questions for CASE#2: Nike Inc.: Cost of CapitalWhat is the WACC? And why is it important to estimate a firms cost of capital? Do you agree with Joanna Cohens WACC calculation? Why or why not?If you do not agree with Cohens analysis, calculate your own WACC for Nike and be prepared to justify your assumptions.Calculate the costs of equity using 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?2-3Mini Case: STEPHENSON REAL ESTATE RECAPITALIZATION2-4Question 1If Stephenson wishes to maximize the overall value of the firm, it should use the debt to finance the $60 million purchase. Since interest payments are tax deductible, debt in the firms capital structure will decrease the firms taxable income.2-5...
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This note was uploaded on 07/04/2011 for the course FINA 463 taught by Professor Tsyplakov during the Fall '10 term at South Carolina.

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Lecture_15_ - 2-1Lecture#15Suggested Questions for...

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