Nike has sales of 36 billion in 2019. Suppose you expect its sales to grow at a rate of 5% forever. Based on Nike's past profitability and investment needs, you expect EBIT to be 7% of sales, increases in net working capital requirements to be 12% of any increase in sales, and capital expenditures to equal depreciation expenses. Nike pays 20% income tax. The opportunity cost of capital is 7%. Nike has 0.9 billion shares outstanding, 3.3 billion in cash, 1.2 billion in debt. Calculate the share price for 2020 using the discounted free cash flow model. Round your final answer to one decimal
Nike has sales of 36 billion in 2019. Suppose you expect its sales to grow at a rate of 5% forever. Based on Nike's past profitability and investment needs, you expect EBIT to be 7% of sales, increases in net working capital requirements to be 12% of any increase in sales, and capital expenditures to equal depreciation expenses. Nike pays 20% income tax. The opportunity cost of capital is 7%. Nike has 0.9 billion shares outstanding, 3.3 billion in cash, 1.2 billion in debt. Calculate the share price for 2020 using the discounted free cash flow model. Round your final answer to one decimal
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Nike has sales of 36 billion in 2019. Suppose you expect its sales to grow at a rate of 5% forever. Based on Nike's past profitability and investment needs, you expect EBIT to be 7% of sales, increases in net working capital requirements to be 12% of any increase in sales, and capital expenditures to equal
Calculate the share price for 2020 using the discounted
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