Course Project You will evaluate the choices in purchasing stock via online brokerage accounts (where you can buy and sell stock via the Internet) and the use of dividend reinvestment plans (known as
Assignment South University 4-4-2021 Course Project The scenario is designed to help you determine and evaluate the payment amount of a car loan and a mortgage, based on the assumption that your household income is $36,000 per year or $3,000 per month. Based on your income, you may spend 28% of your monthly income on housing, and 10% on a car loan. You are to put a 3% down payment on the house and a 10% down payment on the car. Tasks: What is the maximum car payment and mortgage payment you can afford with the following conditions: your monthly household income, 10% for the car payment over 4 years, and 28% for the 15-year mortgage payments? Maximum Monthly Payment in Car Loan = $3,000 × 10% = $300 So, car loan 10% on the monthly income is $300. Maximum Monthly Payment in House Loan = $3,000 × 28% = $840 Housing loan consist 28% on your monthly income of $840. The total amount of Loan is 840+300 = 1140 Create a complete amortization schedule for the car, using the information above. We have to determine the amount of loan Annual income = $36,000 Monthly Income = $3,000. Maximum Car Loan they can afford at 10% interest rate for 48 months is calculated in excel. The car Loan would be 300*12(months) * 4(years) which is equivalent of $14,400. We will assume the interest rate of 10% as advised. Rate = 10% Period = 48 months Down payment = 10% of 14,400 = 1440. Pv of Loan = $11,828.45. Value of car they can afford is $11,828.45. Complete Amortization Schedule for The Car using Excel amortization calculator Loan amount 11,828.45 Annual interest rate 10.00% Loan period in years Start date of loan 2021-04-03 Monthly payment $300.00 Number of payments 48 Total interest $ 2,571.55 Total cost of loan $ 14,400.00 No. PaymentDate BeginningBalance Payment Principal Interest EndingBalance 2021-05-03 $11,828.45 $300.00 $201.43 $98.57 $11,627.02 2021-06-03 $11,627.02 $300.00 $203.11 $96.89 $11,423.91 2021-07-03 $11,423.91 $300.00 $204.80 $95.20 $11,219.11 2021-08-03 $11,219.11 $300.00 $206.51 $93.49 $11,012.60 2021-09-03 $11,012.60 $300.00 $208.23 $91.77 $10,804.37 2021-10-03 $10,804.37 $300.00 $209.96 $90.04 $10,594.41 2021-11-03 $10,594.41 $300.00 $211.71 $88.29 $10,382.70 2021-12-03 $10,382.70 $300.00 $213.48 $86.52 $10,169.22 2022-01-03 $10,169.22 $300.00 $215.26 $84.74 $9,953.96 10 2022-02-03 $9,953.96 $300.00 $217.05 $82.95 $9,736.91 11 2022-03-03 $9,736.91 $300.00 $218.86 $81.14 $9,518.05 12 2022-04-03 $9,518.05 $300.00 $220.68 $79.32 $9,297.37 13 2022-05-03 $9,297.37 $300.00 $222.52 $77.48 $9,074.85 14 2022-06-03 $9,074.85 $300.00 $224.38 $75.62 $8,850.47 15 2022-07-03 $8,850.47 $300.00 $226.25 $73.75 $8,624.23 16 2022-08-03 $8,624.23 $300.00 $228.13 $71.87 $8,396.09 17 2022-09-03 $8,396.09 $300.00 $230.03 $69.97 $8,166.06 18 2022-10-03 $8,166.06 $300.00 $231.95 $68.05 $7,934.11 19 2022-11-03 $7,934.11 $300.00 $233.88 $66.12 $7,700.23 20 2022-12-03 $7,700.23 $300.00 $235.83 $64.17 $7,464.40 21 2023-01-03 $7,464.40 $300.00 $237.80 $62.20 $7,226.60 22 2023-02-03 $7,226.60 $300.00 $239.78 $60.22 $6,986.82 23 2023-03-03 $6,986.82 $300.00 $241.78 $58.22 $6,745.05 24 2023-04-03 $6,745.05 $300.00 $243.79 $56.21 $6,501.26 25 2023-05-03 $6,501.26 $300.00 $245.82 $54.18 $6,255.43 26 2023-06-03 $6,255.43 $300.00 $247.87 $52.13 $6,007.56 27 2023-07-03 $6,007.56 $300.00 $249.94 $50.06 $5,757.63 28 2023-08-03 $5,757.63 $300.00 $252.02 $47.98 $5,505.61 29 2023-09-03 $5,505.61 $300.00 $254.12 $45.88 $5,251.49 30 2023-10-03 $5,251.49 $300.00 $256.24 $43.76 $4,995.25 31 2023-11-03 $4,995.25 $300.00 $258.37 $41.63 $4,736.87 32 2023-12-03 $4,736.87 $300.00 $260.53 $39.47 $4,476.35 33 2024-01-03 $4,476.35 $300.00 $262.70 $37.30 $4,213.65 34 2024-02-03 $4,213.65 $300.00 $264.89 $35.11 $3,948.77 35 2024-03-03 $3,948.77 $300.00 $267.09 $32.91 $3,681.67 36 2024-04-03 $3,681.67 $300.00 $269.32 $30.68 $3,412.35 37 2024-05-03 $3,412.35 $300.00 $271.56 $28.44 $3,140.79 38 2024-06-03 $3,140.79 $300.00 $273.83 $26.17 $2,866.96 39 2024-07-03 $2,866.96 $300.00 $276.11 $23.89 $2,590.85 40 2024-08-03 $2,590.85 $300.00 $278.41 $21.59 $2,312.44 41 2024-09-03 $2,312.44 $300.00 $280.73 $19.27 $2,031.71 42 2024-10-03 $2,031.71 $300.00 $283.07 $16.93 $1,748.65 43 2024-11-03 $1,748.65 $300.00 $285.43 $14.57 $1,463.22 44 2024-12-03 $1,463.22 $300.00 $287.81 $12.19 $1,175.41 45 2025-01-03 $1,175.41 $300.00 $290.20 $9.80 $885.21 46 2025-02-03 $885.21 $300.00 $292.62 $7.38 $592.58 47 2025-03-03 $592.58 $300.00 $295.06 $4.94 $297.52 48 2025-04-03 $297.52 $300.00 $297.52 $2.48 $0.00 Analyze the distributions of principal, interest and the balance over the life of the loan. Car Loan amount 11,828.45 Annual interest rate 10.00% Loan period in years Start date of loan 2021-04-03 Monthly payment $ 300.00 Number of payments 48 Total interest $ 2,571.55 Total cost of loan $ 14,400.00 This above table shows the distribution of the principal which is 11,828.45. the inters of the loan is 300 and the total interest paid is 2571.55. the loan is cleared within 48 months for car loan. House We have to know yearly Payment; 28% x $3000 per month x 1 years x 12 months = $10,800 as yearly payment. Mortgage: 28% x $3000 per month x 15 years x 12 months = $151,200 mortgage payment. The principle would be = $104,626.95 arrived using excel =-PV(5%,15,10080)
Course Project You will evaluate the choices in purchasing stock via online brokerage accounts (where you can buy and sell stock via the Internet) and the use of dividend reinvestment plans (known as
Running Head: ANALYSIS OF NIKE 1 Analysis of Nike Jessica Arroyo South University 4-1-2021 Introduction Nike is a global leader in the field of manufacturing of sports attire and sporting shoes. The company has received global acclaim due to quality, durability and affordability of its products. Due to the search for cheap labor, the company has faced negative press due to allegations of child labor in some of its operations outside of the United States. Moreover, in its supply chain, the company has faced concerns on oppressing of suppliers. Nonetheless, the company has weathered these challenges to continue performing its duties as a going concern. Leadership, which is a major contributing factor to the success of a company, Nike has over the time changed its leadership to be incongruence with its goals and objectives (Mainwaring 2011). In the company’s production and leadership models, the company adopted actions that has led to the massive growth in the company’s capabilities. Corporate Social responsibility is a contemporary issue in many firms globally. Nike has developed a culture of CSR where it relates more with the society and its environs. Nike’s CSR has a unique way of protecting the environment through control of its supply chain leading a great marketing strategy (Mainwaring, 2011). Over the years, Nike has spent millions of dollars supporting the society and its immediate employees. In the company’s operations CSR is imperative to its growth hence having in place a CSR policy and strategy framework (Soares, E. T. P, 2016). However, despite the CSR policy being in place, the company has a quite bad history in its corporate behavior with issues of cheap labor. Competition has grown globally in the production of sporting apparels. However, due to the leadership and the continuous improvement in Nike’s products, has given the company a competitive age over the competitors. Moreover, with adoption of technology, the company has invested heavily on online marketing strategies. Additionally, the company has reduced the mortar stores it has to online business where clients can request products online. Moreover, the sponsorship of Olympics and other games has given Nike a mileage of its products with almost all sports people having a product from the company. Taste, choice and preference is a changing unseen variable that affects many businesses around the globe. Nike has flexibility in its operations where it listens to its customers and producers such products that meet the customer expectations (Kramer, 2019). Also, as the global trend for sports change and more games are internationalized, Nike has ensured that it has products that match the demand and also the world expectations. For instance, despite the different countries in the world, sporting equipment are universal and hence a major boost to Nike. EVA ANALYSIS EVA = NOPAT – (invested capital *WACC) ;NOPAT =Net operating profit after deduction/ payment of taxes ; Invested Capital = debt+ capital leases + shareholder’s equity ;WACC = Weighted average cost of capital is 6.55% WACC E / (E + D) Cost of Equity D / (E + D) Cost of Debt (1 – Tax Rate) 0.9622 6.77% 0.0378 1.0792% (1 – 14.065%) 6.55% (Nike, 2020). NOPAT calculation US$ in millions 12 months ended: May 31, 2020 Net income 2,539 Deferred income tax expense (benefit) (380) Increase (decrease) in allowance for uncollectible accounts receivable 184 Increase (decrease) in equity equivalents (196) Interest expense 151 Interest expense, operating lease liability 81 Adjusted interest expense 232 Tax benefit of interest expense (49) Adjusted interest expense, after taxes 183 Interest income (62) Investment income, before taxes (62) Tax expense (benefit) of investment income 13 Investment income, after taxes (49) Net operating profit after taxes (NOPAT) 2,477 (Nike, 2020). Invested Capital Nike Inc. Invested capital calculation (financing approach) US$ in millions   May 31, 2020 Current portion of long-term debt 3 Notes payable 248 Long-term debt, excluding current portion 9,406 Operating lease liability 3,358 Total reported debt & leases 13,015 Shareholders’ equity 8,055 Net deferred tax (assets) liabilities (732) Allowance for uncollectible accounts receivable 214 Equity equivalents (518) Accumulated other comprehensive (income) loss, net of tax 56 Adjusted shareholders’ equity 7,593 Construction in process (1,086) Short-term investments (439) Invested capital 19,083 (Nike, 2020). EVA= 2,477 – 8.96% × 19,083 = 767 Free cash flow; =cash flows from operations + capital expenditure =2485 + (-1086) = 1399 Nike’s Return on Assets (ROA) = Net Income/ Average total assets Net income = ($3.428B) ROA= 11% Return on Equity (ROE) =Net Income ($3.428b)/ (Average Equity over period ($10.488b) =32.7% ROE is a financial ratio that measures a company’s financial performance whereas ROA measures the return on investment through profitability. From the financial analysis, Nike is projected to grow and the company is within safe margins. For instance, the REO at 32.7% is a good indication of wealth creation for the shareholders. Also, the company can meet its financial requirement to cater for day-to-day operations. Consequently, the firm requires a check on the growing debt. References Kramer, M. (2019). How Nike Will Keep Sales Surging As Global Economy Slows. Retrieved 10 September 2019, from https://www.investopedia.com/nike-s-digital-revival-may-pave-the-way-for-big-sale-growth-in-2019-4587432 Mainwaring, S. (2011). How Nike Redefines Leadership in a Global, Social Community. Retrieved 10 September 2019, from https://www.fastcompany.com/1715007/how-nike-redefines-leadership-global-social-community Nike. (2020). NIKE, Inc. – Investor Relations – Investors – News, Events and Reports. Retrieved 29 March 2021, from https://investors.nike.com/investors/news-events-and-reports/default.aspx Soares, E. T. P. (2016). Closing the ‘CSR gap’through a successful CSR strategy: insights from Nike Inc (Doctoral dissertation).