Nike Case

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Written by:

Matthew M

August 31, 2015

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University

A

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2 / 392

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I used the yield on 20-year U.S. Treasuries as the risk-free rate, 5.74%. To estimate the market risk premium I used the arithmetic mean of 7.50%. I used Nike's average beta, 0.80. .0574 + (.075 - .0574).8 = 7.1% WACC = KdWd(1 - T) + KeWe WACC = (.028 x .27) + (.071 x .73) = 5.9% Calculate WACC using market values: The weight of debt is calculated by adding the current portion of long-term debt, notes payable and long-term debt, and dividing it by the sum of debt and equity...
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Treasuries as the risk-free rate, 5.74%. To estimate the market risk premium I used the arithmetic mean of 7.50%. I used Nike's average beta, 0.80. .0574 + (.075 - .0574).8 = 7.1% WACC = KdWd(1 - T) + KeWe WACC = (.028 x .27) + (.071 x .73) = 5.9% Calculate WACC using market values: The weight of debt is calculated by adding the current portion of long-term debt, notes payable and long-term debt, and dividing it by the sum of debt and equity...
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