The goal of this assignment is to understand the different elements involved while estimating the weighted cost of capital for a firm. The case contains a scenario around Nike as well as an analysis provided by the chief protagonists in the case.
Your goal is to analyze the case situation thoroughly and have answers to the following questions:
1. Understand the basic WACC and the importance of calculating a firm’s cost of capital. Do you agree with Cohen’s WACC calculation? Why or why not?
2. If you don’t agree with Cohen’s WACC analysis, conduct your own analysis and justify your assumptions.
3. Calculate the cost of equity using CAPM and DDM. What are the advantages and disadvantages of each method?
4. What should Kimi Ford recommend regarding an investment in Nike?
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