Nike Inc
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Written by:
Marcella P
Date added:
June 10, 2016
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Grade:
A
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6 / 1658
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I found what interest Nike’s has to pay to finance its debt. The shoe company finances its debt with bond which follows those characteristics:
|Coupon Rate |6.75% (Paid semi-annually) |
|Issued |07/15/1996 |
|Maturity |07/15/21 |
|Current Price |$95.60 |
Because the bond interests are paid semi-annually I first calculated their semi-annual cost:
|Payment |(6...
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This yield represents the cost of issuing the bonds for the company before taxes. Nike is in the 35% bracket, but the company also pays state taxes. Those varied from 2.5% to 3.5% depending of the years, so I counted them as an average of 3%.
Nike’s Cost of Debt after Taxes
Kd = 7.13 x [1-(35+3)%]
Kd = 4...
displayed 300 characters
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