In a Word document, please respond briefly and concisely to the following questions:
Nike Inc., Cost of Captial Case Study 15
What is WACC and why is it important to estimate a firm’s cost of capital?
Is the WACC set by managers or investors?
What mistakes did Joanna Cohen make in her analysis?
Which of the three methods she discusses in her memo – CAPM, DDM, or ECM -- is best for calculating the cost of equity? Why?
Based on a more accurate WACC, what should Kimi Ford recommend regarding an investment in Nike? (Hint: see below and complete the template first.)