Nike, Inc. Not the questions you were looking for? Its components allow us to see how much it costs a company to raise money to finance new projects. By knowing the costs of financing a new project, we can select projects which offer a return that is higher than the WACC. We also agree that Cole Haan faces different risks in an entirely different industry but since it represents such a small fraction of total revenues, we should not calculate its individual WACC.
This article is one of an occasional series of journalistic case studies, modeled on a technique widely used in business schools to examine management problems. After a brief review of a company's history - in this case Nike Inc. CAN the runner who stumbles still win the race? Executives at Nike Inc.
But I am willing to tell you that it can be a complex case in which we can doubt about sensitivity analysis done by Kimi Ford portfolio manager too. Perhaps, we can take new assumptions. What is the cost of capital? The cost of capital is the rate of return that a firm must earn on the projects in which it invests to maintain the market value of its stock. Cohen calculated a weighted average cost of capital WACC of 8.