The process can be simple when viewed in purely mechanical terms, but a number of subtle issues can obscure the best investment choices. Supply chain finance focuses is on creating liquidity in the supply chain through various buyer or sellerled solutions with or without a facilitating technology. All inquiries and claims for payments regarding, capital cases cja 30s and 31s, should be directed to the appropriate cja clerk assigned to the presiding judge. The market responded mixed signals to nikes changes. The cost of capital is the companys cost of using funds provided by creditors and shareholders. Nikes cost of capital case study case 14 nike inc cost of capital. Weighted average costs of capital wacc is an essential estimation that is needed in order to determine the amount of interest that will be paid for each additional dollar financed. This new dimensions in hrd pdf case is a group project that is due on march 28 just before class begins at 10.
Funding growth in an investment bank case analysis, loop capital. Nike inc cost of capital by maria canchola on prezi. The aim of this case and analysis is to find and show the mistakes that are. This fund invests mostly in fortune 500 companies with an emphasis on value investing. What is the wacc and why is it important to estimate a firms cost of capital. The cost of capital case study solution, two managers attend weekly training executive working on a job that requires to estimate the cost of capital for encana corporation, a leading north americ. A quantitative case study of the total population of high growth smes listed on the ngm. Cost of capital on july 5, 2001, kimi ford, a portfolio manager of northpoint group, a mutualfund management firm, pored over analysts writeups of nike, inc. Ford was considering buying some shares for the fund she managed, the northpoint largecap fund, which invested. The installed cost and the net working capital define the initial investment cash flow. Kerrisdale capital investment case study competition. Provides calculation wacc, although it was designed to mislead the students. Using market value, we came up with a cost of capital of 9. November23,2016 nike, inc cost of capital prepared by justin nychuk bus 495.
Just fill in the sections with simple, clear writing, and all of a sudden youll see the bones of a compelling case take shape. This case is about the impact of an environmental factor external issue on dividend policy of the firm internal issue. The cost of equity is estimable is several ways, including the capital asset pricing model capm. It is also the trading name of the case centre usa, a nonprofit making company. Nike inc cost of capital case solution, nike inc cost of capital case analysis, nike inc cost of capital case study solution, nike inc cost of capital case solution, a4. Nike, inc cost of capital capital market and financial information on or around july 5, 2001 current yields on u. The essence of capital budgeting and resource allocation is a search for good investments in which to invest the firm s capital. Case solution for encana corporation the cost of capital. The cost of equity is the amount of compensation an investor requires to invest in an equity investment. On july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutualfund management firm, pored over analyst writeups of nike, inc. Ford was considering buying some shares for the fund she managed, the northpoint largecap fund, which was invested mostly in fortune 500 companie.
Along with jpmorgan chase, bank of america, and citigroup, bank of finteck is one of the. Funding growth in an investment bank xls file, loop capital. Deal execution achieved purchase price savings by testing highimpact deal drivers, specifically earnings and debt. If you continue browsing the site, you agree to the use of cookies on this website. Which method is to calculate cost of debt better than others. Conclusion after discounting cash flows provided in exhibit 2 with the calculated wacc of 9.
Nike case analysis wacc nike inc case study please enjoy. This post introduces you to a simple 6part framework for developing your case. Each group will turn in one report sounds obvious, but might as well make it explicit. Nike, inc cost of capital on july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutualfund management. This case can be a complex case in which we can doubt about sensitivity analysis done by kimi ford portfolio manager too. In particular, an understanding of capital budgeting practices and cost of capital issues is necessary to solve the case. The capital asset pricing model capm approach for calculating the cost of equity in the case of nike inc uses a beta of 0. Decline in sales, growth, and market share plans to increase exposure in midprice footwear and apparel lines and commits to cut down expenses. Your client bank of finteck is a large american banking company headquartered in san francisco, california, with central offices throughout the country.
Northpoint large cap fund weighing whether or not to buy nikes stock. The case centre is a notforprofit company limited by guarantee, registered in england no 1129396 and entered in the register of charities no 267516. Case number 2 nike incorporateds cost of capital is a vital element when addressing opportunities regarding topline growth and operating performance. Case analysis of nike, inc cost of capital case study. The purchase of this machine is not expected to create any change in net working capital of the company nwc. Case study analysis cost of capital at ameritrade finance. Funding growth in an investment bank case study solution, loop capital. This is arrived at as the most relevant to be used since it accounts for the variations seen in the past in the corporations betas. A companys cost of capital is the cost of its longterm sources of funds. This case was prepared from publicly available information by jessica chan, under the supervision of robert f. Nike inc cost of capital case solution and analysis, hbr. Case analysis of nike, inc cost of capital find mba.
Sharing ideas developing rapport bringing resources assisting in strategy. Kimi ford has done a cash flow estimation, and asked her assistant, joanna. Nike, inc cost of capital recapitulation of the cases highlights. Firstly, the cost of debt is taken as the yield to maturity of the debts of usec, market premium as average of the market rate of return, risk free rate as 30 year treasury bond rate, tax rate of 40% as given in the case and finally the cost of equity is calculated using this data and the. T he cost of equity exceeds the cost of debt capital and is in the range between 8% and 20%, while the cost of debt capital reaches the range between 1. The formula for calculating the cost of equity using capm is the. Financial analysis and decisions darryl yasinowski university of regina due november 23rd 2016 2. I case background kimi ford the manager of the northpoint largecap fund, which invested mostly in fortune 500 companies, weighing whether to buy nikes stock. Nike case analysis cost of capital beta finance free 30day. The cost of capital case solution, case analysis, case study solution. Cost of capital case study solution contains an 1,100 word answer to the four questions below, a financial analysis in excel that compares joannas financials to the correct financials, and a powerpoint presentation that summarizes the case and walks the audience thru the financial analysis. Nike, inc cost of capital by jessica chan, robert f. The role of supply chain finance scf is to optimize both the availability and cost of capital within a given buyersupplier supply chain. The cost of capital case analysis, encana corporation.
Funding growth in an investment bank excel file, subjects covered entrepreneurship expansion finance strategy by gregory white, jeff borden, scott t. Contact us directly at casesolutionsavailableatgmaildotcom if you want to order for encana corporation. Case studies here are a few examples of how pwc has added value for its pe clients during the deal phase, post investment and exit phases. She weights the capital structure using the book value of equity. This machine could be sold at the end of year 5 for t5300,000 usd. It is the minimum rate of return the firm must earn overall on its existing assets. It also helps predict risk would be happen with a company risk management. Nike this case is a group project that is due on march 28 just before class begins at 10.
To calculate the cost of debt, cohen simply divides the interest expense by the average balance of the interestbearing debt. Book values for debt are likely to be much closer to market values than are equity book values. She decided instead to develop her own discounted cash flow forecast to come to a clearer conclusion. The case is designed to be taught in one class session of approximately 1. Financial analysis and decisions darryl yasinowski. Average cost of capital is computed by dividing the total required cost of capital by the total amount of contributed capital. Capital cases district of connecticut united states. A key challenge for personal capital during its launch was how to build account aggregation software that would display a complete, instant, and uptodate view. The environmental disaster was hurricane katrina which was caused the huge destruction across the southeastern united states.
Apparently, the issue of nikes case is to control and check the calculation cost of capital done by joanna cohen. The cost of capital case solution,encana corporation. Cost of capital case summary in this case, kimi ford, a portfolio manager at northpoint group, a mutual fund company, manages the northpoint largecap fund. Case analysis of nike, inc cost of capital case study template. Think of it this way your case for support doesnt start out as a polished document. Nike inc cost of capital case solution term paper warehouse. On july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutual fund management firm, pored over analysts writeups of nike, inc.
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