Case I Nike Corporation

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| Case I, Case Studies in Finance case 14 | Cost of Capital | | | | # 8 | 1/1/2013 | | #8 Portfolio Manager Assistant 3321 Napoleon Avenue New Orleans, 70125 504-6718031 March 18, 2013 Kimi Ford Portfolio Manager at NorthPoint Group New York City Re: Case I, Case 14,Cost of Capital calculation using GAAP. As you requested I have calculated Nike’s cost of capital to then discount your forecasted free cash flows to Equity and calculate the value of Equity at time zero and then calculate the current price per share and determine whether Nike’s stock is undervalued. The current cost of capital is Nike’s Cost of Capital is 9.32%. Current Value of Equity is $15,643millions. Nike’s current Equity Value per share or current price per share is $57.62, which is 36% higher than the current price ($42.90). Thus, NorthPoint Group, mutual fund should invest in Nike’s Stock because the stock is undervalued. I had to change several of Cohen’s assumptions for the calculation of the weighted average cost of capital because, she used Book values instead of market values. Market values are the most appropriate for the WACC calculation as it is the measure of the rate of return required by a capital provider in exchange for foregoing an investment in another project, asset or business with a similar risk Now. It has been my pleasure to provide this analysis for you. I have provided an appendix with my calculations of the Weighted average cost of capital and its components as well as the Value of equity calculations and correct current price per share. I have also provided an in depth written analysis of 5 pgs and 2 pgs of executive summary Sincerely, #8 Enclosure: 8 pgs of analysis and 2pgs of spreadsheets appendix. Executive summary The current situation is that NorthPoint Large Cap Fund is weighing whether to buy Nike’s stock. Nike

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