1)Nike has significant sales in emerging markets. Recently, Nike announced that

Question

1)Nike has significant sales in emerging markets. Recently, Nike announced that its earnings (reported in dollars) would be impacted by the depreciation of many of the emerging market currencies in relation to the dollar.

Assume before this announcement that Nike is trading at $75 a share. The P/E for Nike equals 25 and the PEG (based on a 5 year forecast) equals 2.0.

a) Based on the above information, what is the value of E for Nike?

b) Based on the above information, what is the forecast for average annual earnings growth for the next 5 years?

c) Assume due to the exchange rate outlook, Nike

Explanation / Answer

Let X debit card. X has the binomial distribution with n = 100 trials
if X has the binomial distribution with n trials and a success probability of p then
P[X = x] = n!/(x!(n-x)!) * p^x * (1-p)^(n-x)
P[X = x] = 0 for any other value of x.
the binomial is the sum of n independent and identically distributed Bernoulli trials.
X ~ Binomial( n = 100 , p = 0.2 )
n * p = 20
n * p * (1 - p) = 16
( n * p * (1 - p)) = 4

(b)
X ~ Binomial( n = 100 , p = 0.7 )
n * p = 70
n * p * (1 - p) = 21
( n * p * (1 - p)) = 4.5

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