The Value Of NIke Inc
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Weiyang Jin
College:
College of Business and Public Management
Major:
Finance
Faculty Research Advisor(s):
Andreas Kakolyris
Abstract:
This example examines optimal capital structure choice by simulating the weighted average cost of capital. We explore how levered beta affects Nike Inc's market value and its optimal capital structure. Nike Inc is one of the most prominent and globally recognized companies, having been publicly traded since its inception in 1969. Our model utilizes the synthetic rating method to investigate capital sensitivities of hypothetical alternative leverages by leveraging Bloomberg Terminal data. The literature findings suggest that changes in the value of beta due to different leverage levels or other risk factors may not significantly affect the cost of capital. We choose a US firm with a market capitalization exceeding five billion dollars, akin to other empirical studies in the literature. Capital structure and its impact on a firm’s cost of capital and value remain subjects of extensive debate, given its implications for strategic restructuring decisions. Our findings, specific to Nike Inc, are detailed and analyzed in this poster presentation.