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Homework answers / question archive / Suppose that in July 2013, Nike Inc

Suppose that in July 2013, Nike Inc

Finance

Suppose that in July 2013, Nike Inc. had EPS of $2.64 and a book value of equity of $11.72 per share. 
P E 
Price 
Enterprise Value Enterprise Value 
Book Sales EBITDA 
Average 29.84 2.44 1.12 9.76 Maximum + 136% + 70% + 55% + 86% Minimum - 62% - 63% - 48% - 34% 
a. Using the average P/E multiple from the table above, estimate Nike's share price. b. What range of share prices do you estimate based on the highest and lowest P/E multiples in the table above? c. Using the average price to book value multiple in the table above, estimate Nike's share price. d. What range of share prices do you estimate based on the highest and lowest price-to-book value multiples in the table above? 
a. Using the average P/E multiple from the table above, estimate Nike's share price. 
Nike's share price for this case will be $ 
(Round to the nearest cent.) 
b. What range of share prices do you estimate based on the highest and lowest P/E multiples in the table above? 
Range of prices: The highest price will be $ The lowest price will be $ 
. (Round to the nearest cent.) 
. (Round to the nearest cent.) 
c. Using the average price to book value multiple in the table above, estimate Nike's share price. 
Nike's share price for this case will be $ 
(Round to the nearest cent.) 
d. What range of share prices do you estimate based on the highest and lowest price to book value multiples in the table above? 
 

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a. Computation of Share Price:

Share Price = EPS* AveragePE

= $2.64*29.84

Share Price = $78.78

 

b. Computation of Highest and Lowest Range of Share Price based on P/E:

Share PriceHighest Range = Share Price*(1+Maximum Range)

= $78.78*(1+136%)

Share PriceHighest Range = $185.92

 

Share PriceLowest Range = Share Price*(1+Minimum Range)

= $78.78*(1-62%)

Share PriceHighest Range = $29.94

 

c. Computation of Share Price:

Share Price = Book Value of Equity * PriceAverage

= $11.72*2.44

Share Price = $28.60

 

d. Computation of Highest and Lowest Range of Share Price based on Price to Book Value:

Share PriceHighest Range = Share Price*(1+Maximum Range)

= $28.60*(1+70%)

Share PriceHighest Range = $48.61

 

Share PriceLowest Range = Share Price*(1+Minimum Range)

= $28.60*(1-63%)

Share PriceHighest Range = $10.58