Fundamentals of Corporate Finance 3rd Edition - Ch. 10 Question 8: a, b,c, d

8. Consider the valuation of Nike given in Example 10.1.

a. Suppose you believe Nike's initial revenuse growth rate will be between 7% and 11% (with growth always slowing linearly to 5% by year 2018.) What range of prices for Nike stock is consistent with these forecasts?

b. Suppose you believe Nike's initial revenue EBIT margin will be between 9% and 11% of sales. What range of prices for Nike stock is consistent with these forecasts?

c. Suppose you believe Nike's weighted average cost of capital is between 9.5% and 12%, What range of prices for Nike stock is consistent with these forecasts?

d. What range of stock prices is consistent if you vary the estimates as in parts (a), (b), and (c) simultaneously?

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Which statement about the cost of the options is true? she would save $1,000 by choosing option b. she would save $5,650 by choosing option a. she would save $11,200 by choosing option b. she would save $11,300 by choosing option a.

Nicholas makes $2,000 per month. he spends $300 on credit card payments and $350 on an auto loan. what is his debt-to-income ratio? 17.5 percent 22 percent 2.7 percent 32.5 percent

10. problems and applications q10 a market is described by the following supply-and-demand curves: qsqs = = 2p2p qdqd = = 300â’p300â’p the equilibrium price is $ and the equilibrium quantity is . suppose the government imposes a price ceiling of $90. this price ceiling is , and the market price will be $ . the quantity supplied will be , and the quantity demanded will be . therefore, a price ceiling of $90 will result in . suppose the government imposes a price floor of $90. this price floor is , and the market price will be $ . the quantity supplied will be and the quantity demanded will be . therefore, a price floor of $90 will result in . instead of a price control, the government levies a tax on producers of $30. as a result, the new supply curve is: qsqs = = 2(pâ’30)2pâ’30 with this tax, the market price will be $ , the quantity supplied will be , and the quantity demanded will be . the passage of such tax will result in .