Single or Multiple Costs of Capita
Autor: florida_dreamer1 • February 10, 2014 • Essay • 313 Words (2 Pages) • 1,851 Views
Nike, Inc.: Cost of Capital
Analyst of Joanna Cohen’s memo
Single or Multiple Costs of Capital?
In Joanna’s report she started off explaining why she chose the single cost of capital approach over the multiple cost of capital approach for Nike. Even though Nike does have many different departments selling everything from clothing to shoes to exercise equipment, Joanna stated it would be best to use the single cost of capital approach and only find one WACC for the company instead of different ones for each department. We agree with Joanna in this aspect and believe only one cost of capital is needed to be computed to find an appropriate WACC for Nike. We believe this because even though there are different departments to this company, all pose the same risk, thus we only need a single cost of capital for the analysis of Nike.
Methodology for Calculating the Cost of Capital: WACC
Cost of Debt
Cost of Equity
Putting it All Together
Nike, Inc.: Cost of Capital
Analyst of Joanna Cohen’s memo
Single or Multiple Costs of Capital?
In Joanna’s report she started off explaining why she chose the single cost of capital approach over the multiple cost of capital approach for Nike. Even though Nike does have many different departments selling everything from clothing to shoes to exercise equipment, Joanna stated it would be best to use the single cost of capital approach and only find one WACC for the company instead of different ones for each department. We agree with Joanna in this aspect and believe only one cost of capital is needed to be computed to find an appropriate
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